While some establishments tend to be very profitable, it seems that GuocoLand Limited isn’t as lucky. GuocoLand actually got a 25% drop in its net profit, reaching 43 million in the second quarter that finalized at the end of last year. The revenue did jump around 60% to around $370 million, and that was mostly thanks to the strong sales and really good passive revenue. But as you can imagine, things like that won’t really last for a very long time.
This quarter was not that ideal. In fact, it mostly brought in problems because the joint venture and associate related profit fell a lot. GuocoLand’s profit doubled during the first half of the financial year. So, seeing this significant drop is pretty problematic and it does bring in front its own set of challenges. But you do need to realize that the drop was caused by some significant issues, so taking that into consideration is very important.
There were some increases here, mostly from a stronger performance of the residential projects. The Changfeng Resident did bring great results for GuocoLand. But as you can imagine, there are always going to be some issues if you don’t continually invest into projects that pay off really well. At this time, GuocoLand states that the Sims Urban Oasis has received a temporary occupation permit. And the project that has around 1024 units is actually around 94% sold, at least that was the case at the end of this past year.
Also, the Martin Modern project launched at the middle of last year sold around 210 units from 450. Not exactly half, but it’s still promising and there are signs that more people will end up buying this. It does make a whole lot of sense, and in the end it certainly brings in front some unique ideas and situations to consider.
Is this situation good for GuocoLand? It depends on how you see these things. While it’s certainly not ideal for GuocoLand, there’s definitely a lot of value to be had from investing alongside other companies. But that also means that your revenue will fluctuate at times. And that’s what really happened here to begin with. Hopefully GuocoLand will have a better quarter when the next results come in, as a 25% loss doesn’t sit well with anyone, especially investors that want to pour money into a business!
http://www.straitstimes.com/business/property/guocolands-profit-down-25-in-q2
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