Published November 13, 2008

Allgreen Q3 net falls 10.9% to $31m as global credit crisis starts to bite


MALAYSIAN tycoon Robert Kuok's Singapore-listed property unit Allgreen Properties posted a 10.9 per cent year-on-year decline in third-quarter net earnings to $31.2 million.

Revenue fell 8.2 per cent to $113.4 million over the same period. The bottom line was also eroded by an increase in interest expense, as well as higher distribution and selling expenses.

Allgreen said that as at Sept 30, 2008, its gearing stood at 0.45, up from 0.30 as at Dec 31, 2007. Net borrowings increased from $743.6 million as at end-2007 to $1.14 billion as at Sept 30, 2008 - due mainly to overseas investments and purchase of development sites in Singapore.

The group booked lower revenue from development properties in Q3 but revenue from investment properties continued to improve from the same period last year on the back of higher rental rates from offices, serviced apartments and retail space. Allgreen owns Great World City at Kim Seng Road, comprising offices, shop space and serviced residences; Tanglin Mall, Tanglin Place and a majority stake in the 546-room Traders Hotel near Orchard Road.

For the first nine months of this year, Allgreen's net earnings were down 41.1 per cent from the same year-ago period to $65.8 million, due mainly to a 35.4 per cent drop in revenue to $275.4 million, as well as lower writeback of provision for diminution in value of development properties. Allgreen's bottom line was also hit by higher taxes due to lower non-taxable income in the first nine months of 2008 compared with the same year-ago period. Finance cost was also higher, due mainly to the increase in borrowings for investments in China and Vietnam, as well as land purchases in Singapore.

The group reiterated that its full-year 2008 results are expected to be profitable as stated in its first-half results announcement. 'The ongoing turmoil in the credit and equity markets in the United States and elsewhere internationally has started to impact the local property market, as evidenced by a significant drop in transactions in Q3 2008 compared with the same period last year. This is likely to continue into Q4 2008 and will result in lower development profits for 2008 as compared to 2007,' the group said yesterday.

However, barring unforeseen circumstances and excluding fair-value adjustments, Allgreen expects to remain profitable for the full year.

Third-quarter earnings per share fell to 1.96 cents from 2.24 cents in the same year-ago period. Net asset value per share stood at $1.41 as at Sept 30 this year, almost unchanged from $1.40 as at Dec 31, 2007. On the stock market yesterday, the counter ended 0.5 cent lower at 39 cents.