Roxy-Pacific third quarter profit up 42% to S$8.9mln

The developer posted 44% revenue surge from its core Property Development segment as it launched 4 residential projects.

Roxy-Pacific Holdings Limited (“Roxy-Pacific” or the “Group”), a homegrown specialty property and hospitality group, on Wednesday reported a 42% jump in net profit to S$8.9 million for the third quarter ended September 30, 2010 (“3Q2010”) from S$6.3 million in the previous corresponding period (“3Q2009”). This increase was on the back of a 41% surge in revenue to S$53.1 million in 3Q2010, driven mainly by a sharp 44% rise in revenue to S$40.5 million from the Group’s Property Development segment, according to a Roxy-Pacific report.

Cumulatively, the Group achieved revenue of S$169.3 million and profit after tax of S$30.8 million for the nine months ended September 30, 2010 (“9M2010”).

Said Mr Teo Hong Lim, Executive Chairman and CEO of Roxy-Pacific: “We are pleased to have maintained our growth momentum, which was achieved through positioning ourselves with the right product at the right price in all our three business segments.

“This can be seen especially in the strong take-up of our development projects. To date, our 99-unit Haig 162 and 25-unit Studios@Tembeling have been fully sold, while our other 2 projects, the 30-unit Straits Residences and 53-unit Jupiter 18 near Eunos MRT, have seen take-up rate in excess of 85%. Although property market has cooled down recently following the new government measures, as buyers and sellers adopt a ‘wait-and-see’ attitude, we believe that genuine demand for residential properties remain robust, supported by the strong economy and job market.”

With the strong sales from the four newly launched projects, the Group has a balance progress billings of S$241.9 million to be recognised from 4Q2010 to FY2012.

As a vote of confidence for the property market, the Company’s 45%-owned associate, Mequity Pte Ltd, acquired Toh Tuck Apartment in an en-bloc sale for S$33.9 million in August. The freehold site has a total land area of 40,449 sq ft and a maximum plot ratio of 1.54 for apartment development..

Performance Review
The Group registered a 41% growth in revenue to S$53.1 million in 3Q2010 from S$37.6 million in 3Q2009. The improvement in turnover was a result of a 44% increase in revenue from its Property Development segment as well as a 86% surge in revenue from its Property Investment segment. The Group’s Hotel Ownership segment also reported a 31% increase in revenue in 3Q2010 due to an increase in both the average occupancy rate (“AOR”) and average room rate (“ARR”).

The 44% increase in revenue from the Group’s Property Development segment in 3Q2010 to S$40.5 million was largely due to the recognition of revenue from Nova 88, Nova 48 and The Lucent in 3Q2010 as the result of commencement of construction of these projects in 4Q2009. The Group recognised revenue from seven development projects namely, The Azzuro, The Verte, The Ambrosia, The Florentine, Nova 48, Nova 88 and The Lucent in 3Q2010. This segment contributed to 76% of total Group revenue in 3Q2010.

The remaining 24% of the Group’s turnover in 3Q2010 was attributable to the Group’s Hotel Ownership and Property Investment segments. Revenue from the Hotel Ownership segment increased 31% to S$11.7 million in 3Q2010. The hotel’s AOR improved from 87.8% in 3Q2009 to 94.8% in 3Q2010. Its ARR was also up 28.5% to S$177.0 in 3Q2010 as compared to S$137.7 in 3Q2009. Overall, the Group’s revenue per available room (“RevPar”) increased by 38.7% from S$120.9 in 3Q2009 to S$167.7 in the current quarter.

Revenue from the Group’s Property Investment segment improved significantly by 86% for the current quarter compared to 3Q2009. The increase was mainly due to the recognition of rental income from Kovan Centre and increased rental yield from the renewal of leases for some of the Group’s shop units at Roxy Square.

Outlook
According to the Ministry of Trade and Industry’s announcement on 14 October 2010, the Singapore economy remains on track to grow between 13 to 15 per cent in 2010. Advance estimates showed that the economy expanded by 10.3 per cent in the third quarter of 2010 compared to the same period a year ago. In addition, based on latest statistics released by Urban Redevelopment Authority on 22 October, 2010, overall prices of private residential properties have increased 2.9% in 3Q2010 with sales of new homes at 3,638 units, compared to the 4,033 units in the second quarter.

Added Mr Teo: “Although we expect the property market to remain resilient, we will continue to exercise prudence as we explore opportunities that may arise. The balance amount of our attributable progress billings, which stand at S$241.9 million, provides us with an ample buffer and places us in a good position to seize any such opportunities.”
The latest tourism statistics released by the Singapore Tourism Board shows that visitors to Singapore rose 18.4% in September 2010, marking the tenth straight month of record arrivals.

“The opening of the two new IRs, as well as iconic events such as the inaugural Youth Olympics and the Singapore F1 Grand Prix, have continued to draw tourists to Singapore. This has a positive impact on our hotel business, lifting both our hotel’s Average Occupancy Rate and Average Room Rate in the third quarter. We believe that demand for our hotel rooms should continue to be strong in Q4 and going into 2011.” concluded Mr Teo.
Barring unforeseen circumstances, the directors expect the Group to be profitable in 2010.