SINGAPORE (Nov 13): Pan Hong Holdings reported earnings of RMB10 million ($2.05 million) for 2Q18, up more than sevenfold from RMB1.3 million in the same period a year ago on higher gross profit margins.

Revenue for 2Q18 fell 77.1% to RMB52.7 million from RMB230.1 million due to the fluctuation in revenue and profit across quarters as revenue is recognised upon the handover of ownership of properties to the purchasers.

Revenue was mainly derived from the sales of residential units of Huzhou Hua Cui Ting Yuan Phase 2, whereas 2Q17’s higher revenue was mainly from the handover of residential units sold under Nanchang Sino Harbour Kaixuan City Zone 3 and Fuzhou Hua Cui Ting Yuan Phase 3.

Nevertheless, the group’s gross profit margin grew to 34.7% in 2Q18 from 16.6% in 2Q17, as Huzhou Hua Cui Ting Yuan Phase 2 had a higher profit margin compared to the residential units in properties sold in the previous year.

Due to the decrease in revenue, cost of sales fell 82.1% to RMB34.4 million in 2Q18 from RMB191.9 million a year ago.

Selling and distribution expenses fell 29.8% to RMB4.1 million from RMB5.8 million previously due to a decrease in advertising and promotion costs for Yichun Royal Lake City.

In 2Q18, the group also recognised an exchange gain of RMB0.8 million compared to an exchange loss of RMB1.8 million a year ago, due to gain of the group’s subsidiaries denominated in HKD as a result of the appreciation of RMB against HKD over the quarter.

Pan Hong says it will continue seeking opportunities to acquire land parcels in second- to third-tier cities and consider expanding its property investments portfolio to provide more stable returns in the longer term.

Through its subsidiary, Sino Harbour Holdings, the group expects to expand its revenue base and grasp new opportunities to enhance its profitability. Looking ahead, Pan Hong intends to examine further opportunities to diversify its business while maintaining its core business operations.

Shares in Pan Hong closed 3 cents higher at 41 cents on Monday.