Why Guocoland can expect a better 2H

Its profits took a 70% nosedive in 1Q.

Guocoland reported a 54% yoy decline in 1QFY6/17 revenue to S$202.8m (US$146m), while gross profit fell 70% yoy to S$42.7m (US$31m), due to a high base in 1QFY16 which

included the sale of a completed office block in Shanghai Guoson Centre.

Looking ahead, however, CIMB expects its earnings to be more 2H loaded with rental income from Tanjong Pagar Centre (TPC) filtering in.

"The retail and office portion of TPC  was recently completed and expected to open in phases from Nov 16. The pre-commitment rate, inclusive of signed and under advanced negotiation, for the 890,000 sqf office tower was high at 80%. The residential and hotel components are scheduled to be finished in early 2017. We expect GUOL to generate an attributable S$80m share of retail and office rental revenue when the property is fully leased," it said.

Here's more from CIMB:

Net profit fell a steeper 95% yoy to S$25.6m (US$18.4m) with the absence of a one-off gain from the divestment of the Beijing Dongzhimen development last year.

1QFY17 net profit made up 13% of our full-year forecast.

We estimate that contributions in 1QFY17 came largely from progressive residential billings from Singapore. Ongoing projects such as Sims Urban Oasis saw additional sales of 64 units from Jul-Sep 16, bringing the total take-up rate to 56% while Leedon Residence saw another 15 units changing hands from Jul-Sep 16, bringing sell-through rate to 67%.

We anticipate profits from the sale of residential units at the completed Damansara City in Malaysia to be recognised on completion. In addition to sales at Sims Urban Oasis, The Wallich Residence is planned for launch at end-2016/early-2017.

The group also purchased a new residential site at Martin's Place for S$595m in 1QFY17. When launched, this development is expected to extend the visibility of its residential earnings.