SINGAPORE (Feb 12): Hatten Land has posted earnings of RM10.8 million ($3.6 million) for 2Q18, down by 50% from its earnings of RM21.1 million a year ago on lower revenue and higher expenses.

Revenue for the quarter ended Dec 2017 more than halved to RM43.4 million from RM113.8 million a year ago, mainly due to lower revenue recognised for the Hatten City Phase 2 project as a lower percentage of works was completed during the period.

This was offset in part by the higher revenue contributions from the Harbour City and Hatten City Phase 1 projects, which achieved project completion in FY2016.

Gross profit margin grew 79.7% from 34.4% in 2Q17, largely attributable to the year to date (YTD) impact on lower estimated gross development costs for Hatten City Phase 2.

Other income grew 45% or by RM1 million due to higher unrealised foreign exchange (forex) gains resulting from the ringgit’s strengthening in 2Q18 as well as gain on disposal of property, plant and equipment.

Selling and distribution expenses grew 29.2% to RM9.6 million from RM7.5 million a year ago, a result of the group intensifying its sales and marketing efforts and initiatives for its ongoing and completed projects.

Meanwhile, general and administrative expenses increased by 64.2% to RM11 million from RM6.7 million previously.

This was mainly due to one-off costs in relation to the issuance of shares to employees; additional corporate expenses incurred subsequent to a reverse takeover (RTO) which was completed in Jan 2017; and a non-recurring backcharge of expenses to a third party in the last corresponding financial period, says the group.

For 1H18, Hatten Land’s earnings fell 40.6% to RM13.8 million from RM23.2 million in 1H17.

Colin Tan, Executive Chairman and Managing Director of Hatten Land, believes the city of Melaka’s status as Malaysia’s second most-visited state, anchored by mega infrastructure and tourism projects, will bolster the value of the group’s properties and underpin future demand.

See: Hatten Land acquires land parcels in Melaka for $35.3 mil for mixed developments

In a Monday statement, Tan also highlights the group’s 2H18 sales of RM907 million, which he says provides clear earnings visibility to the group.

Hatten Land says it will continue to pursue value-accretive growth opportunities to enhance value for its shareholders, and that its directors are confident of the group’s positive financial performance for FY18.

Shares in Hatten Land closed 1 cent lower at 16 cents last Friday.