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Amara Holdings Limited Faces Slowdown with Decreased Revenue

Amara Holdings (SGX: A34), a hotel and property investor and developer, announced its full year results yesterday evening.

Some of the brands under the company include Amara Signature, Amara Hotels, and Amara Sanctuary. The company also has a newly renovated life-style mall called 100 AM in Singapore that’s within walking distance from the Tanjong Pagar MRT station.

Performance for the year

The company recorded revenue of S$ 80.7 million for the whole of 2013, which was 11% lesser than the previous year. Both the property development and hotel investment & management businesses had been affected and saw a drop in revenue. In particular, the former saw fewer sales in the residential property space.

On a brighter note elsewhere, the newly renovated 100 AM retail mall in Singapore enjoyed higher rental revenue as expected. Amara Holdings’ property portfolio also saw another year with fair value gains; in 2013 and 2012, the value of the company’s properties had increased in value by S$11.5 million and S$11.3 million respectively.

All told, the company ended the year with profits of S$ 27.25 million, some 7% lower compared to S$29.4 million in 2012.

As for the balance sheet, Amara Holdings saw a slight strengthening of its balance sheet compared to a year ago as its net debt ratio dropped to 68% from 74% despite its cash balance decreasing from S$15.2 million to S$ 12.6 million.

Prospects for the future

The company’s management is wary of the hotel industry in Singapore. In a nut shell, the company’s expecting an increase in the total supply of hotel rooms in Singapore, which could put pricing pressure on its own rooms going forward.

To mitigate such risks, the company will be focusing on upgrading its services and products along with the renovation of one of its food and beverage outlets.

Amara Bangkok is also preparing to start operations in the second half of 2014. With that up and running, investors might see  revenue growth coming from the hotel business. Meanwhile, rental income from the company’s  shopping mall and office tower is also expected to increase as tenancy agreements are up for renewals.

Foolish Conclusion

Amara Holdings is one of the smaller property developers in Singapore. Given its exposure to the hotel and property investment segment, its results might be shielded to some extent if the property development sector makes a turn for the worse in the future.

The company had been able to comfortably declare an annual dividend of S$0.01 per share for 2013. At its current share price of S$0.52, that translates into a dividend yield of 1.94%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.