Published August 12, 2008

Ho Bee's Q2 profit falls 70% to $37m

Revenue down 27%, due mainly to lower recognition from devt projects


HO Bee Group has announced a net profit of $36.96 million for Q2 2008, a 70.4 per cent fall from $125.1 million a year earlier.

Its property development revenue shrank 29 per cent to $110.4 million.

Revenue was $116.8 million, a 27 per cent slide from $160 million previously. Ho Bee said this was mainly due to lower recognition of revenue from property development projects.

Another contributing factor was a $71 million fair-value gain on investment properties in Q2 last year. Excluding this, the drop in net profit would have been 32 per cent.

Property development revenue shrank 29 per cent in Q2 2008 to $110.4 million. Turnover in this segment accounted for 94.5 per cent of group turnover.

Ho Bee cited its policy of deferring recognition of income at various stages of completion for residential units sold under on deferred payment terms until Temporary Occupation Permits (TOPs) for developments are obtained.

It said TOPs for Quinterra and Vertis should be obtained by Q1 2009, while TOPs for Orange Grove Residences, The Coast and Paradise Island are expected by Q2 2009. Construction work on Turquoise has begun and is expected to completed by the end of Q2 2010.

Ho Bee said: 'Despite of current weak sentiment in the residential property market, contributions to revenue and earnings from projects that have been sold are expected to be significant over the next two years.'

Revenue from property investment increased 42 per cent year on year in Q2 2008 to $4.2 million. This was attributed to higher rental income from office space at Samsung Hub and industrial buildings at HB Centre II and One Tannery Road.

Revenue from Hotel Windsor increased 40 per cent to $2.2 million.

Q2 earnings per share were five cents, down from 17 cents a year earlier. Ho Bee has recommended a dividend of one cent per ordinary share for the quarter.

Ho Bee's share price ended a cent lower at 78.5 cents yesterday.