MIXED property developer First Sponsor Group on Tuesday (Feb 20) booked a net profit slide of 96.8 per cent to S$1.9 million for the second half ended Dec 31, 2023, from S$59.9 million a year ago.
This comes as its top line for the period decreased 52.9 per cent on-year to S$147 million, from S$312.2 million, on lower revenue from the sale of properties and property financing, although this was partially offset by revenue increases from hotel operations and rental of investment properties.
In particular, revenue from the sale of properties plunged 90.1 per cent to S$18.2 million in H2 FY2023, driven by the absence of significant inventory handover from The Pinnacle project in Dongguan, China.
This is as the project is mostly sold and completed, with only two small office, home office (Soho) units and three retail units handed over in H2 FY2023, compared to 168 residential, 45 Soho and two retail units, as well as 111 carpark lots in the year-ago period, said First Sponsor.
Despite the falls, the group, which has operations in China and the Netherlands, said its overall gross margin for the period remained fairly consistent at 45.2 per cent, compared to 44.8 per cent a year ago.
First Sponsor’s H2 earnings per share was S$0.0019, down from S$0.0649 in H2 FY2022.
The group has declared a final dividend of S$0.031 per share for FY2023. This will be paid on May 27, subject to shareholder approval at its annual general meeting.
This is higher than the FY2022 final dividend of S$0.027 per share.
Together with its interim dividend of S$0.011 per share in H1 FY2023, this brings the total dividend for FY2023 to S$0.042 per share.
For the full year ended Dec 31, First Sponsor recorded a net profit of S$12.5 million, down 90.5 per cent from S$131.3 million in FY2022.
Full-year revenue also slid 33.8 per cent on-year to S$282.9 million, from S$427.5 million, which the group attributed to the revenue from sale of properties decreasing by 82 per cent on lack of significant inventory handover.
The company noted that the property market sentiments in China worsened in this half-year with even weaker buying confidence, adversely affecting pre-sales for its projects.
“Despite slow pre-sales, the group does not intend to significantly compromise on the selling prices of these projects, but will instead adopt a longer-term view as appropriate, continuing to sell them with an operating profit margin,” said First Sponsor.
It noted that a “substantial number” of these projects will be able to commence at least a partial handover during FY2024 and the group may be able to account for such additional sales, should there be a positive turnaround of buying confidence.
Meanwhile, in the Netherlands, the group’s Dreeftoren redevelopment project in Amsterdam will be delayed by six months due to the facade contractor filing for bankruptcy in September last year.
“The targeted completion dates have been revised to Q2 2025 and Q2 2026 for the office and residential tower, respectively,” said First Sponsor.
The counter ended unchanged on Tuesday at S$1.19, before the results release.
