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Frasers Property posts 18% increase in earnings for 1HFY21 on gain from revaluation of industrial properties

Atiqah Mokhtar
Atiqah Mokhtar5/12/2021 09:33 AM GMT+08  • 3 min read
Frasers Property posts 18% increase in earnings for 1HFY21 on gain from revaluation of industrial properties
Frasers Property recognised a gain of $358 mil following the revaluation of industrial assets in Australia and Europe.
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Frasers Property has reported earnings of $275.8 million for its 1HFY2021 ended March, representing growth of 18% y-o-y from $233.8 million previously.

Earnings per share (EPS) on a fully diluted basis, after fair value change and exceptional items, was 8.39 cents for the period, compared to 6.31 cents the previous year.

Before fair value change and exceptional items, EPS stood at 9.55 cents compared to 5.77 cents the previous year.

The increase in earnings comes despite a 26.6% y-o-y drop in revenue to $1.6 billion for the period, which the company attributes to the ongoing impact of the pandemic.

Panote Sirivadhanabhakdi, group CEO of Frasers Property, says the group’s hospitality business remains hard hit with dampened occupancies and room rates due to widespread travel restrictions and lockdowns.

Despite the lower revenue, the earnings jump follows the recognition of a gain on the change in use of a portfolio of industrial properties located in Australia and Europe from properties held for sale to investment properties, in line with Frasers Propety's initiatives to grow its industrial and logistics asset base.

SEE:Frasers Hospitality CEO to step down, Frasers Property group CEO to take over reins

The gain, which reflects the difference in fair value following the transfer from its previous carrying amount, amounted to $357.9 million.

To that end, gross profit fell only 0.4% y-o-y to $983 million. Lower administrative expenses and higher other income saw pbit increase 5.9% y-o-y to $836.8 million for the 1HFY2021.

Without the gain from the change in use of the industrial properties, pbit and earnings would be $479 million and $23 million respectively.

Cash and cash deposits stood at $2.4 billion as at March 31.

Looking ahead, Frasers Property says it will continue optimising performance of its portfolio. Upcoming launches include Parc Greenwich, a 496-unit condominium project, in 4QFY2021, while asset enhancement initiatives for Alexandra point have commenced in February.

Frasers Property notes that the suburban mall business remains resilient and relevant, with tenants’ sales recovery continuing to outpace shopper traffic recovery, and will focus on strengthening retail management capabilities.

In Australia, over 1,300 residential units are scheduled for settlement over the remainder of FY2021. On the industrial and logistics front, Frasers Property Industrial has ten assets in Australia and three in Europe spanning some 391,000 sqm in aggregate that are planned for completion over the next two years.

On the back of strong leasing activity with renewals and new leases for approximately 346,000 square metres of space secured across the group’s Australia and Europe industrial and logistics portfolio in 1HFY2021, Frasers Property Industrial’s portfolio is approximately 98.3% occupied.

The group anticipates a potential surge in domestic travel in China and will focus on region-specific marketing strategies, while long-stay corporate and domestic travel base continues to support its hospitality segment in the meantime.

As at 9.31 am, shares in Frasers Property are down 1 cent or 0.83% lower at $1.20.

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