Sim Lian: 2QFY15 net profit fell 65% y/y to $25.5m, in tandem with a 56% drop in revenue to $91.4m.
Top-line was weighed by a 83.3% decline in revenue from the property development division at $26.3m, as a result of reduced revenue contributions from several projects which were accounted for on percentage of contribution method.
This was partially offset by higher contributions from the construction division at $54.0m (+28.4%), due to increase in percentage of work done.
Operating margin fell 6.5ppt to 29.4%, weighed by FX losses of $3.2m and a 47% rise in other operating expenses to $2.7m.
Going forward, Sim Lian remains committed to seeking strategic investment opportunities and is focused on building a stable base of recurring income to smoothen its fluctuating profits from property development division, guiding that the operating environment for private residential property market in Singapore continues to remain challenging.
The group recently announced the proposed acquisition of a freehold commercial property located at 59 Albany Highway, Perth, Australia, as part of its diversification efforts.
Sim Lian’s balance sheet remains strong with net gearing at just 2.2%. At the current price, the group trades at 8.7x annualized 2QFY15 P/E.
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