GuocoLand's gains fall 43% on lower property sales

Aug 23, 2008
GuocoLand's gains fall 43% on lower property sales
By Chua Hian Hou

COOLING regional property markets have taken a hefty chunk out of
GuocoLand's bottom line.

The property developer's full-year net profits plunged 43 per cent to
$161.8 million on the back of a 4 per cent dip in revenue to $670.9
million.

Besides lower contribution from property sales, GuocoLand enjoyed
significant one-off contributions for the 2007 financial year. These
included a $19.3 million contribution from the sale of a long-term
investment, $16.9 million from the sale of a hotel in Hanoi, and
$10.3 million from an equity swap.

Its finance costs had also risen by 22 per cent to $39.4 million, due
to higher interest rates and higher bank borrowings.

Earnings per share was 20.17 cents, down from 46.15 cents last year,
while net asset value rose from $2.30 last June to $2.41 this year.

Despite the poorer showing in the 12 months ended June 30 this year,
GuocoLand is paying out a dividend of eight cents per share, the same
as last year.

It warned that this financial year is likely to be challenging due to
slowing economic growth in Singapore and in the region.

This is already showing up in more 'cautious sentiment in the
property market...evidenced by a slowdown and delay in property
launches and a lower take-up rate' in Singapore, it said.

GuocoLand is hopeful that the upcoming integrated resorts will boost
economic growth and, accordingly, its own fortunes. It added that the
medium-term demand for residential property should remain stable.

Its other markets are also under pressure. China, despite higher
growth compared with Singapore, is also facing a cooling property
market due to 'credit squeeze, slower sales and lower prices'. While
it will continue to grow in the long term, medium-term demand will
only be 'stable' in the light of these problems.

And while Vietnam's long-term prospects 'remain bright', it is
currently beset by high inflation, which has prompted the government
to tighten credit and reduce loans.

One bright spark is Malaysia. GuocoLand said government policies to
make home ownership more attractive meant 'property sentiment will
remain positive in the medium term'.