First Sponsor Group has reported earnings of $69 million for the 1HFY2021 ended June, up 18.7% y-o-y from $58.1 million.
Earnings per share (EPS), on a fully diluted basis, came in at 5.2 cents for the period, declining 1.3% y-o-y from 5.27 cents previously.
Revenue grew 50.5% y-o-y to $156.8 million, primarily driven by a $59 million increase in property development revenue on the back of the handover of SOHO loft units in Plot F of the Chengdu Millennium Waterfront project in 1H2021.
However, gross profit fell 15.2% y-o-y to $71.3 million, which First Sponsor attributes to the “significantly lower gross profit margin” on the SOHO loft units.
Despite the fall in gross profit, profit before tax grew 2% y-o-y to $68.5 million, driven mainly by a higher share of income from associates and a one-off gain from the divestment of Wan Li.
Lower tax expenses of $5.2 million for the 1HFY2021 (compared to $15.2 million in 1HFY2020), bumped profit after tax up 20.1% y-o-y to $68.5 million.
Cash and structured deposits stood at $294.7 million as at June 30, compared to $476.3 million the year before.
The board has approved a first interim tax-exempt (one-tier) cash dividend of 1.1 cents per share, unchanged from the same period the year before. “Subject to the successful implementation of the group’s business strategy and market conditions amidst the current uncertainties arising from the Covid-19 pandemic, the board will continue to work towards a stable dividend payout with a steady growth,” says Neo Teck Pheng, group CEO for First Sponsor.
In July, the Group entered into a joint venture to subscribe for a 36% equity stake in a project company that owns and will redevelop two adjacent plots of mixed-use development land in Humen, Dongguan with a saleable GFA of approximately 110,000 sqm which comprises approximately 82,000 sqm (75%) of residential GFA and 28,000 sqm (25%) of commercial GFA.
This marks the Group’s fourth property development acquisition in the Greater Bay Area for the year.
First Sponsor also highlighted the completion of the group’s 33-owned Terraced Tower project, its first residential development project in the Netherlands. The group intends to commence development of the Dreeftoren Amsterdam project, which encompasses 312 residential units with a lettable floor area of 20,300 sqm and office with a lettable floor area of 15,600 sqm and 1,600 sqm of commercial space in 4Q2021.
Preliminary discussions with the relevant authority have commenced regarding the redevelopment potential of Meerparc which is located in the Amsterdam CBD.
Looking ahead, the Group expects the performance of its European operating hotel portfolio to remain weak. In addition, hotel performance will be materially and adversely impacted if the Group’s European operating hotels are not eligible for the government subsidies or the government subsidies are no longer available in the future.
On the flip side, First Sponsor highlights that the Crowne Plaza Chengdu Wenjiang and Holiday Inn Express Chengdu Wenjiang Hotspring Hotel in the PRC have returned to a performance level similar to pre-Covid-19 times.
“Backed by a strong balance sheet, substantial potential equity infusion from the exercise of outstanding warrants and unutilised committed credit facilities, the group says it will continue to actively pursue opportunities to expand its footprint in the regions that it has an existing exposure,” says Neo.
Shares in First Sponsor closed up 4 cents or 3.03% higher at $1.36.
