Fragrance Group

Fragrance Group: 3Q14 net profit grew 6.7% y/y to $24.3m, buoyed mainly by lower non-controlling interests (-93%), while operating profit fell 9%, despite revenue spike of 17.5% to $133.3m, led by lower selling prices of property development units and higher sales expenses, partially mitigated by lower finance costs from the capitalization of finance costs. Meanwhile, top line was driven by progressive recognition of income from property development projects of $128.7m (+21.2%), partially offset by lower investment income of $4.6m (-36.5%) due to the commencement of AEI works at investment property at Alexandra Road. Gross profit margin narrowed 6.1 ppt to 28.1% on lower prices on new properties, which reflected the 0.7% shave of private residential property prices in 3Q, the fourth straight quarter of decline. Fragrance's proposed spin-off of its property business in Australia on the Catalist board remains the company's key move in the near term, aiming to unlock value of its four assets with a cost of A$166.6m. At $0.215, counter is valued at 1.6x P/B.