GuocoLand Limited’s Latest Earnings: What Investors Need to Know

Property developer, GuocoLand Limited (SGX: F17), announced its financial results for the full year ended 30 June 2017 (FY2017) yesterday.

Here’s a quick rundown on the financial figures from the latest period:

1. Revenue went up by 5% year-on-year to S$1.11 billion. This was mainly due to “higher residential sales and progressive revenue recognition from residential projects in Singapore”.

2. However, net profit declined 41% to S$357.2 million. The drop in the bottom line was largely due to a one-time gain recognised in FY2016 from the disposal of subsidiaries relating to a mixed-use development project, Dongzhimen, in Beijing, China. This was partially offset by fair value gains from investment properties.

3. The firm’s balance sheet strength had deteriorated in FY2017. As of 30 June 2017, the firm had S$4.34 billion in debt and S$1.12 billion in cash. A year ago, it had S$3.83 billion in debt and S$1.43 billion in cash. The 13% increase in debt was due to “partial financing of new investments with loans and borrowings during the financial year”.

4. Net asset value per share for FY2017 was at S$3.18, an increase from FY2016’s figure of S$2.95.

For FY2017, GuocoLand achieved robust residential sales in Singapore despite tough market conditions. Goodwood Residence has been fully sold while as at 30 June 2017, the 381-unit Leedon Residence was around 90% sold. Meanwhile, the 1,024-unit Sims Urban Oasis was approximately 80% sold.

Over in Shanghai, China, GuocoLand launched Phase 3 of the 664-unit Changfeng Residence. The company has sold and received bookings for over 600 units, as at the end of June 2017. The revenue contribution from the sale of the units will be recognised in the current financial year.

In FY2017, Tanjong Pagar Centre and Damansara City – the firm’s integrated mixed-use developments in Singapore and Kuala Lumpur, Malaysia – started operations.

At Tanjong Pagar Centre, the office and retail spaces are more than 90% committed, while at Damansara City, the office and retail spaces are approximately 100% and 80% committed respectively.

In April 2017, GuocoLand expanded beyond Asia and into the United Kingdom and Australia through a strategic partnership with Eco World Development Group Berhad. The joint venture firm, Eco World International Berhad, in which GuocoLand holds a 50% stake, has four development projects under construction in London and Sydney.

Shareholders will receive a final dividend of 7.0 Singapore cents per share. A year ago, a final dividend of 5.0 cents per share and a special dividend of 4.0 cents per share were given out. The special dividend was dished out due to a one-time gain from the disposal of the project in Beijing.

Mr Raymond Choong, GuocoLand Group President and Chief Executive Officer, said the following regarding his firm’s performance for FY2017:

“GuocoLand has delivered a creditable set of results against the backdrop of a challenging operating environment. This is supported by healthy sales at our residential projects in Singapore and we are very pleased with the good leasing commitments at Tanjong Pagar Centre and Damansara City, our two flagship integrated developments in Singapore and Malaysia. It has been an eventful year as we continued to execute our strategic plans, making a total $1.4 billion of land acquisitions and investments for sustainable growth and to diversify the income stream.”

Looking ahead, he added:

“We are excited about our healthy pipeline of development projects and as at end June 2017, the Group’s existing and new development projects have a total potential gross development value of approximately $10 billion. These projects are expected to contribute to the Group over the next few years.”

Shares of the property developer opened at S$2.33 today. This translates to a price-to-book ratio of 0.73 and a dividend yield of 3%.

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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.