Here's what made OUE's 35.8% profits dip worse

Rocketing expenses took analysts by surprise.

According to Phillip Securities Research,  higher finance expenses were the only negative surprise in OUE's latest results. 

It noted that higher marketing costs incurred for the Twin Peaks project coupled with an increase in administrative expenses (higher legal/professional fees and head count cost), resulted in the group registering a lower yy net profit of S$14.6 mn for 2Q13, a 35.8% y-y dip.

Here's more:

OUE reported a 15.8%y-y increase in 2Q13 revenue at  $112.0mn, mainly due to higher revenue recognition from project Twin Peaks, offset partially by lower revenue in the Hospitality division and Property Investment division.

Gross profit, on the other hand decreased by S$5.1 mn due largely to increase in cost of sales and lower contribution from 6 Shenton Way.

Management has declared an interim dividend of 1 cent per share and a special dividend of 20 cents per share.

We are positive to note that the asset spin-off plan is successfully completed while the principle approval had been obtained to convert part of 6 Shenton Way into a mixed development of retail/serviced apartments/office space, which could potentially unlock greater value for the strategic site.