Published 12 May 2011
The Business Times
By Kalpana Rashiwala
It’s gunning for string of launches this year including Buckley Rd condo, Segar Rd EC
City Developments Ltd (CDL), which posted a 77.9 per cent jump in first-quarter net profit to $282.3 million, is optimistic that positive sentiment and business confidence will be sustained and is aiming to launch a string of projects for the rest of this year.
By the end of the first half, the plan is to launch a low-rise, 64-unit condo at Buckley Road that will feature a conserved bungalow as a clubhouse, as well as a 602-unit executive condo (EC) project at Segar Road in Bukit Panjang. This will be the first EC project in Singapore’s western part in recent years and demand is expected to be strong, said the group.
‘At the appropriate time’, the group plans to launch Jean Nouvel Residences at 18 Anderson Road, which is being developed jointly with Wing Tai. The project will have 156 apartments and penthouses in two 36-storey towers.
The group has also earmarked a few new projects for release in H2 2011 – the redevelopment of the Lucky Tower and Futura sites as well as a third parcel at Pasir Ris next to the Livia and NV Residences projects.
‘With the Singapore economy tracking the government’s 2011 growth forecast, the improvement in market sentiment coupled with a low interest rate and high liquidity environment, present a favourable environment for real estate investment for genuine buyers and investors,’ Mr Kwek said.
‘The group is of the view that property investment, taken with a medium to long-term perspective, still continues to offer the best hedge against inflation.’
CDL’s group revenue for the first quarter ended March 31, 2011 rose 9.8 per cent to $773.7 million. The strong improvement in profit was on the back of higher earnings from property development as well as rental properties.
Profit before income tax (including share of after-tax profit of associates and jointly controlled entities) from property development rose by 31.6 per cent or $30.5 million to $127.06 million for Q1 2011 from a year ago.
The group booked profits from Cliveden at Grange, One Shenton, Shelford Suites, The Residences at W Singapore Sentosa Cove, The Solitaire, Wilkie Studio and Volari for Q1. Profits were also booked from joint-venture projects, namely, Livia, NV Residences and The Gale.
However, no profit was recognised from several sold-out or nearly sold-out projects – Hundred Trees at West Coast, Cube 8 at Thomson Road, 368 Thomson, Tree House at Chestnut Avenue and The Glyndebourne at Dunearn Road. These developments are still in their early stages of construction but the booking of profits should begin for some of them in Q2.
Profit from rental properties increased 153.2 per cent or $107.8 million to $178.1 million for Q1 – resulting in this segment being the lead contributor to the group’s profit before tax. This was due chiefly to profit being booked from the $215 million sale of The Corporate Office, an office block at the Robinson Road/McCallum Street corner. The sale was completed at end-February.
Profit from hotel operations slipped $5.4 million or 14.8 per cent to $30.9 million.
CDL said that with the adoption of Financial Reporting Standard INT FRS 115 from Jan 1, 2011, the group continues to recognise revenue and profit for sale of Singapore development properties under the progressive payment scheme, based on the percentage of completion method. However, units sold under the old Deferred Payment Scheme (DPS) are accounted for only upon the projects obtaining Temporary Occupation Permit (TOP). As some of these projects obtained TOP in the financial periods under review, the Q1 2010 results were restated accordingly for units sold under DPS.
Mr Kwek also revealed that the mezzanine notes issued earlier by South Beach Consortium Pte Ltd (SBCPL) – in which CDL has a 50.1 per cent stake – to CDL and Hong Kong’s Nan Fung group will be redeemed. The main construction contract for the mixed development project is expected to be finalised around mid-2011.
Cash and cash equivalents have grown steadily, from $981.5 million as at end-2009 to $1.87 billion as at end-2010 to $2.28 billion as at end-March 2011. ‘As at March 31, 2011, the group’s net gearing ratio continues to remain low at 26 per cent, with interest cover at 25.9 times. This does not take into account fair value gains on investment properties as the group states its investment properties at cost less accumulated depreciation and impairment losses,’ stressed Mr Kwek.
The group said that it was ‘confident of remaining profitable for the current year’.
Earnings per share rose to 31.1 cents, from 17.4 cents for Q1 2010
In the stock market yesterday, CDL shares closed two cents higher at $11.60.
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