Hiap Hoe Limited - MANAGEMENT REPLY: How much weaker will the Singapore property market get?

27/10/2014 – Hiap Hoe Limited says its Singapore property sales are facing slow growth in Q2FY14.

The developer of Treasure on Balmoral, Skyline 360, Waterscape at Cavenagh, The Beverly and Oxford Suites soft launched another project, HH @ Kallang in May and expects to receive its temporary occupancy permit in 2016.

Days Hotel Singapore and Ramada Singapore recorded positive contributions and stable room occupancies at Zhongshan Park.

However, it warns its hospitality division is facing challenging times due to rising costs and fewer tourist arrivals, while its retail and office components maintain near-full occupancies.

It says it is cautious, while it aims to build up recurring revenues and a regional presence.

Hiap Hoe launched a 7-storey, 269 room Four Points by Sheraton Hotel in Melbourne’s Docklands, which it expects to complete by the end of 2017.

The company just announced earnings for Q2FY14:

Revenue: -65.4% to S$27.8 mln
Profit: (S$5.7 mln) to S$29.3 mln
Cash flow from operations: S$8.1 mln vs S$26.7 mln

The decrease in revenue was mainly due to a fall of S$74.8 mln in sales income and project income.

The decrease in sales income was due to lower progressive revenue recognition from Waterscape at Cavenagh, with additional 1.7% revenue recognised in Q2 2014 compared with 11.4% revenue recognised in Q2 2013.

The decrease was also due to its booking of revenue from the sale of units at the Signature at Lewis and Skyline 360 totalling S$46.3 mln in the same quarter last year.

The decrease in project income was due to the absence of revenue from construction of the hotel/commercial properties at Zhongshan Park, which were completed in Q2 2013.

These decreases were offset by an increase of S$5.6 mln inrental revenue generated from investment properties in Australia which were acquired in Q4 2013 and Q1 2014, and from SuperBowl, S$4.3 mln rental revenue, S$9.9 mln revenue from hotel operations and S$2.5 mln revenue from its leisure business.

In connection with an internal restructuring exercise, it sold its remaining units in Skyline 360 and Signature at Lewis to HH Residences Pte Ltd on 23 September 2014 for S$42 mln in cash.

Hiap Hoe's interest income doubled to S$0.27 mln as it purchased more commercial papers and placed about S$35.6 mln in fixed deposits.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. How much weaker will the Singapore property market get?

It remains cautious about the Singapore private residential property market.

Question

2. Can it repay its debt, since the company has insufficient amount of cash?

Hiap Hoe has secured borrowings of S$287.6 mln repayable in less than a year, and S$400.3 mln worth of borrowings due in more than a year.

How are they going to repay its loans when it only has cash of S$72 mln?

Total number of questions in the full story: 6)

Management reply: Thank you for the message and interest in Hiap Hoe. Hiap Hoe would like to give this media opportunity a miss.

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