A Look On Metro Holdings Limited

Shares of Metro Holdings Limited (SGX: M01) have gained 6.3% in price since last Friday to close at S$0.935 this week. Given that the Straits Times Index  (SGX: ^STI), Singapore’s market barometer, had slid by 3.2% over the same period, Metro Holdings is clearly a big winner in the stock market for the week.

Metro Holdings, which started business in the 1950s as a textile store, has grown over the years into a multi-national property and retail group. The company currently has two core business divisions – property development and investment, and retail. Its geographical focus is on China, Indonesia, Singapore, and the United Kingdom.

On Thursday, Metro Holdings announced its financial results for the quarter ended 31 December 2015. Total revenue came in at S$41 million, down by 1.3% from S$41.5 million a year ago.

The retail division had maintained its overall sales levels, even though the retail environment was subdued. Moving out sales of Metro City Square more than offset the impact from the lack of sales from the closed store at Metro Sengkang.

Metro Holdings’  property division saw a decrease in revenue to S$1.9 million in the reporting quarter – this compares with the S$2.7 million clocked in a year ago. The lower revenue had been largely due to the sale of Frontier Koishikawa in Japan in August 2015. As of 31 December 2015, the average occupancy rate of the firm’s three investment properties was 92.9%.

Moving down the income statement, Metro Holdings’ net profit tumbled by 12.6% year-on-year to S$55.9 million, mainly due to increased general and administrative expenses (a sharp 33% hike), and a decline in share of associates’ results.

General and administrative expenses went up due to the absence of net foreign exchange gains for the quarter. Meanwhile, the decline in share of associates’ results happened because the same quarter a year ago had included the results of a one-off sale of Metro Holdings’ stakes in certain associates.

Earlier this month, the firm had made an unfortunate announcement: Its Group Managing Director, Mr. Jopie Ong, had passed away.

Ong had been a board member of Metro Holdings since 1973 and the company attributed its success to Ong’s dedicated and strategic leadership. Mr. Lawrence Chiang has been appointed as the Acting Group Chief Executive Officer; he was previously Metro Holdings’ Group Chief Operating Officer.

Looking ahead, the firm said that its retail segment “continues to face the challenges of a competitive and discounted trading environment, amidst high operating costs.”

On the property front in China, Metro Holdings said it is well placed to prudently explore opportunities there. As for its real estate business in Singapore, the company commented that market sentiment of the residential property sector is down and sales of its residential project, The Crest at Prince Charles Crescent, remains slow.

Metro Holdings is now trading at 6 times trailing earnings.

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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 Sudhan P doesn’t own shares in any companies mentioned.