SC Global Developments saw a near eight-fold jump in fourth-quarter net profit to $33.2 million – from just $4.2 million a year ago – as it consolidated the results of new subsidiary AV Jennings Ltd (AVJ).

Group revenue for the quarter ended Dec 31, 2009, rose almost ten-fold to $274.5 million from $28 million in Q4 2008.

In December 2008, SC Global increased its stake in AVJ to 50.03 per cent and, as a result, AVJ became a subsidiary. The inclusion of revenue from AVJ pushed up the developer’s topline for Q4.

Turnover also included progressive revenue recognition of the group’s Singapore development projects – including The Marq on Paterson Hill, Hilltops and Martin No. 38 – based on progress of construction. In addition, revenue was also recognised from its development project in China, Kairong International Gardens in Shenyang.

Earnings per share for Q4 2009 rose to 8.36 cents from 1.07 cents a year ago.

For the full 2009 financial year, SC Global’s net profit rose by 28 per cent to $56.9 million from $44.5 million in 2008. This was mainly due to higher profit recognition from the group’s Singapore development projects and the return to profitability for AVJ.

Revenue for 2009 hit a record $804.7 million, a significant 524 per cent increase from $129.1 million in 2008. The group’s net debt to equity ratio fell to 2.18 times at end-2009 from 2.84 times at end-2008. It proposed a final dividend of 1.5 cents per ordinary share.

‘Despite the challenging conditions in 2009 brought by the global financial crisis, the group posted its highest year of revenue and net profit since its inception as a real estate developer in 2000,’ said chief executive Simon Cheong.

SC Global will continue to sell units in projects it has already launched over the year, Mr Cheong said. ‘We are very positive about the high-end market in Singapore given the forecasted growth of 4.5-6.5 per cent in the economy.’ SC Global, which holds a land bank of over 1.1 million square feet of developable gross floor area in the prime areas of Orchard Road and Sentosa Cove in Singapore, is well-positioned as the market continues to improve, Mr Cheong added.

Source: Business Times, 26 Feb 2010

LOCAL developers SC Global Developments and Allgreen Properties have both posted impressive full-year profits on the back of the rebounding real estate market.

SC Global’s net profit last year improved by 28 per cent to $56.9 million – a record for the group since its inception as a developer in 2000.

It said higher profit recognition from its local development projects and the return to profitability of its subsidiary AVJ contributed to its strong performance.

Revenue hit $804.7 million for the 12 months to Dec 31, an impressive 524 per cent increase from $129.1 million the year before.

Full-year earnings per share was 14.39 cents, up from 11.27 cents a year earlier, while net asset value per share rose to $1.21 cents as of Dec 31, from 88 cents.

The group, which develops high-end luxury residences, is recommending a dividend of 1.5 cents a share. There was no dividend in 2008.

SC Global’s shares fell three cents yesterday to $1.73.

Chairman and chief executive Simon Cheong is optimistic about prospects.

‘The group holds a valuable landbank of over 1.1 million sq ft of developable gross floor area in the prime areas of Orchard Road and Sentosa Cove, which positions the group well as the market continues to improve,’ he said.

Allgreen also shone with a 141 per cent increase in full-year profit from $67.4 million in 2008 to $162.7 million last year.

Revenue for the 12 months to Dec 31 increased 75 per cent to $620.8 million, due mainly to higher sales at projects such as One Devonshire in June last year.

Higher occupancies and rental rates in its investment properties like Tanglin Mall also boosted its performance although they were offset by the weaker hotel and serviced apartment sector because of lower occupancy and room rates.

Earnings per share for the year was 10.23 cents, up from 4.24 cents a year earlier, while net asset value per share rose to $1.48 as of Dec 31, from $1.41.

The group is recommending a dividend of four cents a share, from two cents the previous year.

Allgreen’s shares remained unchanged yesterday at $1.12.

Source: Straits Times, 26 Feb 2010

PROPERTY developers looking to boost their residential landbanks can get their cheques ready for a new piece of state land.

The Urban Redevelopment Authority (URA) said yesterday that a 99-year leasehold site at Hougang Ave 2 is open for applications from interested developers.

URA had introduced six new residential sites to the reserve list under the H1 2010 government land sales programme. This 3.02 ha plot at Hougang is the first of them to be released.

The site can house a low density condominium or landed housing development. For condominium units or flats, the maximum gross floor area is 455,152 sq ft.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that the site could yield 380-400 units in a non-landed project, or 140-150 houses in a landed development.

The plot is located within a private residential estate and is near Hougang HDB town. It is also near the Hougang and Kovan MRT stations.

Property consultants expect developers to show keen interest in the land parcel. DTZ executive director Ong Choon Fah observed that it sits within an established landed housing estate, and residents there could form a pool of potential buyers.

For instance, young people may be interested in condominium units there so that they can live near their parents, she said.

Mr Mak believes that a developer who plans for a non-landed project on the site could have a higher chance of winning the tender. This is because non-landed projects can be sold for a higher price on a per sq ft (psf) basis, and the developer would be able to bid more aggressively.

He expects the site to attract some four to eight bids if it is triggered for sale, and the higher bids could range from $159-$193 million, which works out to $350-$425 psf per plot ratio.

Nearby, two units at Kovan Residences were sold at $754-$890 psf last month, going by caveats lodged.

URA will make the remaining five new residential sites on the reserve list available soon. It will release one at Stirling Road and another at Hougang Avenue 7 next month. One site in April and two in May will also be available.

In addition, the government will be releasing another four sites on the confirmed list – two in March and two in April.

Together, sites on the reserve and confirmed lists can supply 10,550 units – the highest number in the history of the government land sales programme.

Source: Business Times, 26 Feb 2010

IF THERE was a party in the property market going on after the Chinese New Year, the Government would have been the party pooper. Barely a week into the new year, it introduced measures to cool the febrile-prone property market. A new seller’s stamp duty was introduced, together with a reduction in the loan-to-value limit for home loans, from 90 per cent to 80 per cent. The measures came just five months after the Government implemented moves to kill innovative interest absorption home loan schemes.

For property prices to go up is patently reasonable. After all, the property market is now seeing ample liquidity, low interest rates and growing consumer confidence buoyed by a recovering economy. That said, however, the speed at which the market is heating up is puzzling. In January, property developers sold 1,476 units – a figure treble that of the preceding month. Prices have increased at a faster rate compared to rebounds from the troughs of previous property cycles. Mortgage lending has also increased steadily by about 12 per cent year-on-year through the whole of last year. Market watchers can only surmise that the strong demand could be coming from either pent-up demand or buyers flush with cash from collective sales.

Typically, official measures to cool the market are inevitably late, given that they occur after the fact. But thankfully, they do not come so late as to fail to pre-empt any speculative bubble. In essence, the Government is doing what it has been adept at doing – precision targeting to put a brake on speculative demand before it spirals out of control. The stamp duty will hit short-term speculators, while the bank loan limit will affect buyers at the margins.

The most powerful weapon in the Government market-cooling arsenal, however, is not the series of measures already announced, but those yet to be. This is one of the oldest tricks in the book, be it in fields as diverse as nuclear strategy, politics or an endeavour as earthy as property: to receive pain in one big dose is bad; to get the same pain in small but discrete instalments is worse, but to have no certainty as to when the dose will come is the worst. As one industry watcher noted, if the Government can enact the measures so fast and without warning, it can do something ‘faster and more painful’ if prices continue to head north. Here, in essence, is the nub of the Government’s pre-emptive strategy that will keep property developers and speculators awake at night: keep them guessing.

Source: Straits Times, 26 Feb 2010

CITY Developments (CDL) is aiming to start building its landmark $2.5 billion South Beach project in Beach Road next year, said its boss Kwek Leng Beng yesterday.

Mr Kwek gave an update on the project – shelved in late 2008, owing to high construction costs, then slated for a start this year – as he unveiled a far- better-than-expected 77 per cent surge in fourth quarter net profits for CDL.

He brushed aside financial worries over the mega project, which is set to boast offices, luxury hotels, retail space and residences when completed in 2016.

CDL bought the site in 2007 jointly with Dubai World and El-Ad Group, which have since been hit by debt woes.

Mr Kwek, the executive chairman, said: ‘We cannot presume that the two partners have no money. If the two partners have no money, then their share will be diluted,’ he said, of the Dubai partners.

Hong Kong’s Nan Fung group emerged as a new investor in the project last June under a refinancing exercise.

‘The verbal understanding with Nan Fung is that both of us will put in more money if so required,’ Mr Kwek said.

CDL’s net profit for the three months ended Dec 31 shot up 77 per cent to $176.7 million, as the group booked profits in projects such as Cliveden at Grange, The Arte and One Shenton.

That beat the average estimate of six analysts polled by Dow Jones Newswires of $129 million. Fourth quarter revenue rose 28.6 per cent to $922.4 million.

‘The global economic recovery is better than expected,’ he said, adding that prospects were good for the residential, hospitality and commercial sectors.

Full-year earnings rose 2.1 per cent to $593.4 million, on the back of better income from strong property prices.

Last year also marked the group’s highest ever revenue of $3.27 billion, up 11.1 per cent, and second highest profit since its inception in 1963. It expects to stay profitable over the next 12 months.

Mr Kwek said that the firm will continue to focus on the local market, capitalising on its land bank and experience – but said China is promising.

‘That is not to say that we will never go abroad… But why would we want to go in a big way at the moment when I still believe that we can make a lot of money in Singapore. We know Singapore best, can read the trends better and are here most of the time,’ he said.

CDL expects sentiment among genuine buyers to remain strong despite recent government measures to cool speculation in the property market.

Full-year earnings per share were 63.8 cents, up from 62.5 cents a year earlier. Net asset value per share rose to $6.57 as at Dec 31, from $5.97.

The group is recommending a dividend of eight cents a share, up from 7.5 cents the previous year. CDL shares rose two cents yesterday to close at $10.34.

OCBC Investment Research analyst Foo Sze Ming said he expects CDL to deliver strong earnings this year, underpinned by its sold residential projects last year – The Gale, Volari and Hundred Trees – that have yet to book in profits.

Source: Straits Times, 26 Feb 2010