Published November 14, 2008

Ho Bee reports 52% drop in Q3 earnings

Revenue down 59% but investment properties do well


HO BEE Investment yesterday said that third-quarter net profit fell 52.3 per cent to $18.7 million, from $39.3 million a year ago, as the developer saw lower revenue contributions from its property development projects.

Looking good: The completion of five projects including The Coast is expected to make a significant contribution to revenue and earnings in the 2009 financial year

Revenue fell 59.4 per cent to $52.5 million, from $129.6 million in Q3 2007. The decline in turnover was mainly due to the deferment of revenue recognition from units sold under the deferred payment scheme, which are now in various stages of completion. The bulk of revenue will only be recognised once the temporary occupation permits are obtained, Ho Bee said.

A higher percentage of revenue was also recognised last year for three residential projects - Orange Grove Residences, The Coast and Paradise Island - as compared to this year.

Earnings per share fell to 2.54 cents, from 5.33 cents in Q3 2007. Ho Bee had cash and cash equivalents of $94.5 million at end-September 2008. Long-term liabilities were $813.4 million, while the debt that is repayable in one year or less, or on demand, came to $354.3 million.

For the first nine months of the year, Ho Bee saw net profit decline 65.0 per cent to $81.8 million, from $233.4 million for the same period in 2007. Revenue fell 50.8 per cent to $263.5 million, from $535.4 million last year.

Revenue from property development for the first nine months of 2008 fell by 53 per cent to $244.7 million amid a cooling property market. But the group's investment properties continue to perform well, achieving high occupancy and strong rental rates. With higher rental income from the office space at Samsung Hub and industrial buildings at HB Centre II and One Tannery Road, revenue from property investment for the nine months ended Sept 30, 2008, rose 44 per cent to $12.4 million.

Looking ahead, Ho Bee said the local property market is expected to remain difficult until there are signs of normalcy in both the stock and financial markets. However, the expected completion of five residential projects by the first half of 2009 - The Coast, Paradise Island, Orange Grove Residences, Vertis and Quinterra - will make a significant contribution to the company's revenue and earnings in the 2009 financial year, the developer added.

Ho Bee shares gained 0.5 cents to close at 38.5 cents yesterday. The stock has lost 73.6 per cent so far this year.