Frasers Property reports 1HFY2023 earnings of $197.2 mil, 52.2% higher y-o-y

1HFY2023 EPS stood at 5.02 cents on a diluted basis, up from 3.28 cents per share the year before.

Frasers Property TQ5 has reported earnings of $197.2 million for the 1HFY2023 ended March, 52.5% higher y-o-y.

The higher earnings stemmed from larger contributions from residential projects in Singapore and China as well as improvements in the hospitality segment.

Earnings per share (EPS) stood at 5.02 cents on a diluted basis, up from 3.28 cents per share in the same period the year before.

“The group’s 1HFY2023 financial performance reflects the improved business environment versus a year ago. The investments we have made in our core capabilities and our continued evolution, even during the pandemic period, have placed Frasers Property in a good position as global Covid-19 restrictions were progressively eased,” says Panote Sirivadhanabhakdi, Frasers Property’s group CEO.

During the period, revenue rose by 15.6% y-o-y to $1.95 billion.

Gross profit increased by 19.4% y-o-y to $803.7 million.

Trading profit grew by 25.4% y-o-y to $614.8 million.

Profit before interest, fair value change, taxation and exceptional items grew by 30.2% y-o-y to $684.9 million.

Net interest expense rose by 16% y-o-y to $196 million, which corresponds with higher average cost of debt y-o-y.

In Singapore, the group’s revenue and PBIT increased by 71% and 97% y-o-y to $716 million and $332 million respectively as residential properties and retail properties rose y-o-y during the period. In residential, the stronger performance was thanks to the higher average selling price and sales volume from Riviere, which obtained its temporary occupation permit (TOP) in January. Higher occupancies and rental rates contributed to the higher revenue and PBIT for retail. PBIT further improved from the maiden share of results and fair value gains from the group’s new joint venture (JV) property, Nex. Nex was acquired in February.

Revenue and PBIT from the group’s Singapore commercial properties portfolio were said to have remained “fairly consistent” y-o-y.

In Australia, revenue and PBIT fell by 15% and 21% to $178 million and $7 million respectively mainly from o lower occupancies across commercial assets, including the impact of the strategic Lee Street tenancy relocation for the upcoming redevelopment of Central Place Sydney. This was partly offset by higher development contributions due to higher levels of residential settlements.

In Thailand, revenue and PBIT decreased by 7% and 2% to $269 million and $80 million respectively due to lower sales volume of residential units. The lesser decline in PBIT was due to lower expenses.

Vietnam’s revenue and PBIT decreased by $41 million and $17 million to $9 million and $1 million respectively mainly due to the absence of contributions from a fully sold project of which settlements concluded in the previous financial period.

The group’s revenue and PBIT for its industrial segment fell by 18% and 12% to $308 million and $182 million respectively. Revenue and PBIT contributions from FLCT fell following the divestment of a commercial property in Singapore and lower contribution from a business park in the UK due to the absence of early surrender fee received from a tenant in the previous financial period.

The drop was also due to lower contributions from progressive completion of Macquarie Exchange and the Taneit projects and the absence of sales of land lots.

Hospitality revenue and PBIT, on the other hand, increased by 31% and 128% to $359 million and $64 million respectively from higher occupancies and room rates across most of the group’s properties.

In its statement, the group says residential remains a core asset class and is an important component in its mixed-use developments.

“The group continues to focus on markets with robust underlying demand and exercising discipline and caution in managing its residential pipeline in view of the rising cost and high interest rate environment,” says Frasers Property.

In Singapore, all units in the 455-unit Riviere have been sold as at April 30. The group also has over 2,600 contracts on hand in Australia with completions and settlements scheduled for the second half of the financial year. The group’s pivot towards single detached houses segment in Thailand since early 2022 is said to be generating higher margins. The group’s pre-sold revenue for its residential business in China came up to $2.9 billion.

As at March 31, cash and cash equivalents stood at $2.93 billion. The group ended the half-year period with net debt to total equity of 72.7% and net debt to property assets of 39.3% which are "within the group’s comfort level” considering its property assets mix. As at March 31, the group’s total debt comprises 77.9% of fixed rate debt.

Assets under management (AUM) as at March 31 stood at $47.3 billion.

“Looking ahead, macro developments, especially in relation to higher inflation, interest rate hikes, volatile foreign currency movements and potential asset repricing, will continue to pose challenges for the real estate sector. We will maintain our astute and disciplined approach toward investment, asset and capital management and development execution as we navigate these macro headwinds,” says Sirivadhanabhakdi.

The group itself acknowledged that the operating environment ahead was “challenging” with macroeconomic headwinds “likely to persist in the near future”.

“Despite these challenges, opportunities from structural shifts exist, particularly from evolving expectations for integrated live, work and play spaces. The group will leverage its established strategic business platforms and focus on managing risk exposures, while being balanced in seeking opportunities that may arise,” says Frasers Property in its statement.

As at 9.28am, shares in Frasers Property are trading flat at 88.5 cents.

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