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First Sponsor's 3Q earnings rise 13.9% to $22 mil

Stanislaus Jude Chan
Stanislaus Jude Chan10/25/2017 07:51 AM GMT+08  • 3 min read
First Sponsor's 3Q earnings rise 13.9% to $22 mil
SINGAPORE (Oct 25): Property developer First Sponsor Group posted a 13.9% increase in earnings to $22 million for the 3Q ended September, from $19.3 million a year ago.
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SINGAPORE (Oct 25): Property developer First Sponsor Group posted a 13.9% increase in earnings to $22 million for the 3Q ended September, from $19.3 million a year ago.

Gross profit in 3Q17 rose 21.4% to $29.6 million, with cost of sales falling 39.4% to outpace the decline in revenue.

Revenue fell 21.4% to $64.8 million in 3Q17, from $82.4 million in the corresponding quarter last year.

This was due mainly to lower revenue from sale of properties in 3Q17 as a lower number of units in the Millennium Waterfront project were handed over during the current quarter.

Cost of sales, which mainly comprises land costs, development expenditure and cost adjustments, borrowing costs, hotel-related depreciation charge, and other related expenditure, fell in line with the decrease in revenue from sale of properties in 3Q17.

The group’s gross profit margin rose to 45.7% in 3Q17, from 29.6% a year ago. This was due mainly to the higher contribution from the higher yielding property financing business during the current quarter.

Revenue generated from property financing more than trebled to $11.3 million in 3Q17, from $2.9 million a year ago.

Administrative expenses increased by 32% to $5.7 million, compared to $4.3 million a year ago.

This was due mainly to the administrative expenses incurred by the Crowne Plaza Chengdu Wenjiang and Holiday Inn Express Chengdu Wenjiang Hotspring hotels.

Other income grew 82.4% to $2.6 million in 3Q17, from $1.4 million a year ago.

This was on the back of a net foreign exchange gain of $9.6 million, partially offset by fair value loss of $6.6 million on derivative instruments.

As at end September, cash and cash equivalents stood at $405.2 million.

“The Group is optimistic about the sales performance of the remaining 949 residential units in the Star of East River project which are expected to be launched for sale during the course of 2018,” says group CEO Neo Teck Pheng.

All 272 residential units of the group’s 30% owned Star of East River project in Dongguan were fully snapped up on the first day of sale when it was launched in late September.

In addition, First Sponsor reports that all 7,302 residential units and 297 out of 371 commercial units within the residential development of the Millennium Waterfront project in Chengdu launched to-date had been sold. It says it will continue to recognise development profit from these sales in 4Q17 and 2018.

With the gradual handover of all residential units in the Millennium Waterfront project by 2018, the group will see a shift in its profit mix from the more lumpy property development business to the relatively more stable property holding and property financing businesses.

“With a strong balance sheet, the Group continues to be on a disciplined quest for investment opportunities in the Netherlands, the PRC and other regions. Going forward, the group may further tap into the debt and equity capital markets to fund its expansion plan,” says Neo.

Shares of First Sponsor closed half a cent higher at $1.365 on Tuesday.

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