SINGAPORE (May 5): Property developer GSH Corp sunk into losses of $1.35 million for the first quarter ended March, versus a profit of $2.8 million posted in the same quarter a year ago.

Revenue fell 10.5% to $21 million from $23.5 million in the previous year due to a 60% decline in contributions from its property business, which amounted to only $3.3 million in revenue compared to $8.2 million in 1Q16.

Revenue from the group’s hospitality business, however, grew by 16% to $17.7 million from $15.3 million a year ago, due mainly to the increase in room occupancy and average room rates at our two hotels in Sutera Harbour Resort in Kota Kinabalu, Sabah.

The group also recorded a $0.5 million share of profit from its associated company, Henan Zhongyuan, after the completion of its investment into the food logistics hub on March 10.

The gains were more than offset by higher finance expenses, which grew by $2.1 million to $6 million from $3.9 million in 1Q16, which was mainly due to the direct expensing of interest costs incurred for GSH Plaza project after Temporary Occupation Permit (TOP).

Prior to TOP, interest costs were capitalised under development property in the statement of financial position.

Administrative expenses also grew by $1 million over the quarter to $5.8 million from the previous year, due mainly to the implementation of a new wage structure as required by the Malaysian authorities for all hotels, which resulted in an increase of staff costs.

In its outlook, the group says it remains positive on Malaysia’s hospitality industry.

GSH continues to expect a challenging 2017 “in light of the current volatile economic environment in the region”, but nonetheless observes “improved sentiments in certain niche markets”.

Shares of GSH closed flat at 51 cents on Friday.