Latest Earnings From Roxy-Pacific Holdings Ltd: Profit Hit By Lower Margin

Roxy-Pacific Holdings Ltd (SGX: E8Z) had released its fiscal third-quarter earnings last Friday.

For a quick background, Roxy-Pacific is mainly engaged in the development and sale of residential and commercial properties. It also owns three hospitality assets and three investment properties.

With that, let’s jump into Roxy-Pacific’s latest earnings.

Financial highlights

The following are some of Roxy-Pacific’s latest financial figures:

  1. Revenue for the quarter came in at S$90.9 million, up 4% from a year ago.
  2. Net profit after tax, however, fell 34% to S$8.8 million due to significantly higher costs of goods sold and increased distribution expenses compared to the previous year.
  3. Consequently, the company’s earnings per share (EPS) also declined 38.7% to 0.68 Singapore cents in the reporting quarter.
  4. As at 30 September 2016, Roxy Pacific had S$886.4 million in total debt and S$238.7 million in cash and cash equivalents. This is a notable decline from the total debt of S$782.6 million and cash and cash equivalents of S$304.2 million seen a year ago.
  5. Roxy-Pacific’s net asset value (NAV) per share had increased by 8.4% year-on-year from S$0.3705 to S$0.4015.

In summary, Roxy-Pacific experienced a considerable increase in its net debt position and lower profit due to a weakening in its gross profit margin from 26% in the third-quarter of 2015 to 20% in the third-quarter of 2016.

Operational highlights and a future outlook

Roxy-Pacific has three business segments, namely, Property Development, Hotel Ownership, and Property Investment.

Revenue from the Property Development segment in the reporting quarter had stepped up by 5% to S$76.2 million mainly due to higher revenue recognition from Trilive, LIV on Sophia and LIV on Wilkie. Lower revenue recognition from Jade Residences and Whitehaven had offset the aforementioned higher revenue.

Meanwhile, Hotel Ownership and Property Investment’s revenues declined by 2% and 0.4% respectively, compared to a year ago. The segments’ revenues came in at S$11.5 million and S$3.2 million.

In the earnings release, Roxy-Pacific gave some updates on new developments happening:

“Roxy-Pacific launched the Straits Mansions freehold residential project in Singapore and eight-storey development, The Hensley, in Sydney, Australia. Both projects have received warm reception, selling over 80% of its units shortly after the sales launch in July and June, respectively.

Straits Mansions is expected to start contributing positively to the Group’s performance in 2Q2017, while The Hensley is expected to contribute positively upon completion in 2018.”

The company’s shares closed at a price of S$0.425 each last Friday and are trading at a price to book (P/B) of 0.95.

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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 James Yeo doesn’t own shares in any companies mentioned.