The Straits Trading Company has reported a $28.6 million loss in the FY2023 ended Dec 31, 2023, reversing from the earnings of $551.3 million in the FY2022.
The loss was attributed to fewer transaction volumes, which made it a “challenging year” for divestments and capital recycling, as well as higher funding costs.
The company reported a narrower loss of $43.5 million in the 2HFY2023 compared to the $121.8 million loss in the corresponding period the year before.
Loss per share for the FY2023 and 2HFY2023 stood at 6.4 cents and 9.7 cents respectively on a diluted basis.
Total revenue for the FY2023 fell by 6.8% y-o-y to $491.7 million as revenue for tin mining and smelting fell by 10.1% y-o-y to $424.7 million. This was offset by the 21.4% y-o-y growth in property revenue of $66.8 million.
During the 2HFY2023, total revenue dipped by 0.6% y-o-y to $255.9 million as tin mining and smelting revenue fell by 1.9% y-o-y to $222.7 million due to the weaker ringgit against the Singapore dollar (SGD). Property revenue, on the other hand, rose by 9.1% y-o-y to $33.1 million mainly due to the full-year revenue contribution from the company’s investment properties in the UK. The properties were acquired in December 2022.
See also: Kimly reports higher FY2024 revenue but earnings down on higher depreciation and other costs
In the FY2023, the company booked a narrower net fair value loss of $25.8 million in investment properties compared to the $75.4 million loss in the year before. The company also saw a narrower net fair value loss of $35.1 million in the 2HFY2023, an improvement from the net fair value loss of $79.7 million in the 2HFY2022.
In the company’s real estate segment, Straits Real Estate continued to grow recurring income from its investment properties with the Gloucester Business Park in the UK securing several lease renewals and achieving an average rent reversion increase of 36%. Rental income also remained “resilient” at $66.8 million, 21.4% higher y-o-y for the full year.
The company’s Malaysian business, STC Property Management, is said to be on track to launch the Crowne Plaza Penang in Straits City in the first half of 2024.
See also: LHN reports higher FY2024 earnings on fair value gains and better operations (update)
“Straits City is expected to benefit from the continued growth of industries in mainland Penang as well as a tourism resurgence in Penang. Other government policies such as the Penang 2030 Vision and the revival of the high-speed rail project between Malaysia and Singapore are also expected to present growth opportunities,” says the company.
The company’s 30%-owned Far East Hospitality Holdings also saw a stronger operating performance in FY2023 on the back of the continued recovery in travel. The company’s ebitda surged by 252.6% y-o-y to $2.7 million in FY2023.
Elsewhere, Straits Trading’s resources segment, mainly via its separately listed Malaysia Smelting Corp, which it owns 52% of, reported an ebitda of $47.3 million, 13.6% lower y-o-y, due to lower average tin prices despite seeing higher sales. Malaysia Smelting Corp will also start the staged decommissioning of the Butterworth smelter.
An interim dividend of 8 cents per share has been declared for the period, unchanged from the dividend in the year before. This will be paid on July 2.
As at Dec 31, 2023, cash and cash equivalents stood at $458.1 million, which the company says will enable it to conduct active capital recycling, enhancing real estate operations through value-add strategy, and seeking out optimal risk-adjusted returns in the use of capital.
“Having taken prudent measures to bolster its various businesses, Straits Trading is well placed to withstand economic and geographical headwinds. The group remains optimistic that the resources and hospitality businesses will continue to benefit from the industry cyclical tailwinds,” says the company in its Feb 27 statement.
Straits Trading’s executive chairman Chew Gek Khim adds, “Straits Trading has managed to navigate the challenges in the current business environment with our diversified business strategy as an investment conglomerate. With a strengthened balance sheet, we will continue to evaluate investment opportunities to deliver sustainable business growth.”
Shares in Straits Trading closed 1 cent higher or 0.63% up at $1.61 on Feb 26.
