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Latest Earnings from Ho Bee Land Ltd: What’s Next After A Steep Jump In Profit?

Ho Bee Land Ltd (SGX: H13) released its fiscal second-quarter earnings (for the three months ended 30 June 2016) last Friday.

For a quick introduction, Ho Bee Land is a property developer and owner with a presence in four countries, namely Singapore, Australia, China, and the United Kingdom. Some of the properties in its investment portfolio include The Metropolis in Singapore and 1 St Martin’s Le Grand in London.

With that, let’s take a look at the company’s performance.

Financial highlights

The following are some of the latest financial figures from Ho Bee Land:

  1. Revenue for the quarter came in at S$172.8 million, up a staggering 464% from the same quarter a year ago.
  2. Profit attributable to shareholders followed, rising 151.8% to S$42.0 million.
  3. Ho Bee Land’s earnings per share (EPS) thus went up by 152% to 6.31 cents from 2.50 cents the year before.
  4. The company ended the reporting quarter with a net asset value (NAV) per share of S$4.13, up 5.9% from S$3.90 a year ago.
  5. For the quarter ending 30 June 2016, Ho Bee Land had S$87.4 million in cash and equivalents and S$1.45 billion in debt resulting in a net debt position of S$1.36 billion. This was a step back from a year ago when the net debt position stood at S$960 million (cash and equivalents of S$14.7 million and total debt of S$975 million).
  6. Free cash flow (FCF) came in at S$133.3 million (operating cash flow of S$133.6 million and Capex of S$244,000). This was higher than the previous year when FCF stood at just S$4.8 million (operating cash flow of S$5.1 million and Capex of S$296,000).

Operational highlights and the road ahead

Ho Bee Land’s steep rise in revenue and profit was due to sales recognition from two recently completed residential properties in the Australian cities of Melbourne and Gold Coast. This helped to offset S$8 million in foreign exchange-related losses stemming from the depreciation of the Australian dollar and British pound against the Singapore dollar.

Chua Thian Poh, Ho Bee Land’s chairman and chief executive, had a few thoughts to share in the earnings release on the company’s road ahead:

“Despite the continuing tough operating environment, the Group remains profitable. This is because of the strong and sustainable recurring income that the Group has built up in Singapore and the United Kingdom over the last few years.

The recent UK Referendum on Brexit has created uncertainties and the weakening of the Sterling pound. Nevertheless, the Group is well-positioned to minimize the impact on the Group’s performance. This is because of the Group’s policy of funding its U.K. investments with borrowings in Sterling pound as well as the long tenure of our leases.

We still believe in the long term fundamentals of London as a global financial city. The current uncertainties will provide us with opportunities for further investments.”

Ho Bee Land’s closed at a price of S$2.22 each last Friday, giving the the company a price-to-book ratio of just 0.5.

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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 Esjay does not own shares in any companies mentioned.