Guocoland swings into loss on SPA cancellations, lower sales

KUALA LUMPUR (Aug 24): Guocoland (Malaysia) Bhd incurred a net loss of RM20.49 million for its fourth quarter ended June 30, 2018, versus a net profit of RM2.39 million in the year-ago quarter, impacted by cancellations of sale and purchase agreements and lower sales.

Besides the profit reduction of RM4.3 million arising from the SPA cancellations, the lower sales done in the quarter resulted in a loss before tax of RM19.9 million, the property developer said in an exchange filing today.

For the same reason, Guocoland recorded a negative net revenue of RM21.13 million for the quarter, compared with a positive revenue of RM95.32 million previously.

“This arose mainly from the cancellations of certain sale and purchase agreements amounting to a total of RM67.4 million,” it explained.

Guocoland’s weaker fourth quarter earnings dragged its full-year net profit down 69.4% to RM37.22 million from RM121.81 million in the preceding year.

This was further exacerbated by the higher selling and marketing expenses of its Emerald Hills project, as well as increased administration and finance costs on the opening of Sofitel Hotel.

Full-year revenue, meanwhile, rose 8.4% to RM309.48 million, from RM285.61 million previously as there were more units sold during the year despite the cancellation of sales of certain units, the group said.

Looking forward, the property arm of Hong Leong Group said it expects the domestic property market to remain lacklustre due to continued weak market and consumer sentiments.

“The overall momentum and prospects of the property market in the next one to two years is expected to remain soft and challenging. The group will launch its projects according to prevailing market sentiments,” it added.

Shares in Guocoland slid half a sen or 0.55% to close at 91 sen today, with a market capitalisation of RM637.42 million.— theedgemarkets.com

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