Published May 15, 2009

Ho Bee Q1 profit up 43%

Higher revenue recognition from Vertis and Quinterra help boost earnings


HO Bee Investment's first-quarter earnings climbed 43 per cent to $37.3 million, from $26.1 million a year earlier, as it recognised revenue from residential projects completed in the first three months of the year.

Turnover for Q1 2009 rose 17 per cent to $110 million, from $94.2 million in Q1 2008.

The bulk came from property development, where revenue rose 18 per cent year-on-year to $104 million. Ho Bee said the increase was mainly due to the higher revenue recognition for two residential projects - Vertis and Quinterra, which obtained temporary occupation permits (TOPs) in January and March 2009 respectively.

Ho Bee executive director Ong Chong Hua said payment has been received from almost all buyers of units in Vertis and Quinterra. Under the deferred payment scheme, the bulk of the purchase price is due once a project obtains TOP.

Ho Bee's The Coast obtained TOP in April, and payment notices are being sent out in batches. So far, the company has not had any problem collecting payments for The Coast, Mr Ong said.

'Cashflow-wise we are good, and in terms of the outlook, we should also be good, as we will recognise revenue from the projects we have sold,' he said.

Q2 earnings will be underpinned by The Coast, as well as Paradise Island and Orange Grove Residences, which will soon receive TOP.

'Barring unforeseen circumstances, the group is expected to remain profitable this year through strong earnings recognition on residential projects that were previously sold,' Ho Bee said in a filing to the Singapore Exchange.

In Q1, earnings per share rose to 5.07 cents, from 3.54 cents in Q1 2008.

Besides higher turnover, Ho Bee benefited from a reduction in income tax due to a writeback of $2.4 million of deferred tax, resulting from the one per cent reduction in the Singapore corporate tax rate in 2009.

Ho Bee has several projects ready for launch, but said it will continue to monitor the market and review its pricing strategy before making any decisions.

Ho Bee shares lost 3.5 cents to close at 59 cents yesterday. The stock has gained 55.3 per cent since the start of the year.