Stagnant condo sales drag Wheelock’s profit down 7.2% in Q3

High expenses and FX losses are also to blame.

Mainboard-listed Wheelock Properties reported that its net profit for Q3 slipped 7.2% year-on-year to $11m, mostly caused by lower progress recognition from Ardmore Three, higher administrative expenses and foreign exchange losses during the quarter.

According to OCBC, Wheelock continues to suffer from persistent headwinds in Singapore’s residential sector, particularly in the high-end segment. Only three out of 84 units have been sold at Ardmore Three, while sales at Scotts Square residential towers remained stagnant with 79% of total units sold.

However, OCBC notes that Wheelock’s results are broadly in line with expectations in spite of the decline, and that the group’s initiatives to rejuvenate Scotts Square in an attempt to attract more international luxury labels and F&B concepts is commendable.

“We judge this quarter’s earnings to be within expectations and 9M14 PATMI now makes up 92.0% of our full year forecast, including the S$109.4 accounting gain in 2Q14 which resulted from moving the group’s HPL stake from AFS assets to an interest in an associate.

Here’s more from OCBC:

Wheelock Place continues to enjoy strong occupancy (99.7% as at end 3Q14) and positive rental reversion over the quarter, with the blended monthly rent now ~S$13.50 psf per month. 

Scotts Square retail’s occupancy remained flat QoQ at 93% as at end 3Q14, though we note that average monthly rent dipped marginally from ~S$22 psf as at end 2Q14 to ~S$21 psf as at end 3Q14. 

Management reports that the exercise to rejuvenate the mall with stronger international luxury labels and F&B concepts is in process, and they will roll out advertising and promotion initiatives over the rest of the year to heighten awareness and entice shoppers for festive shopping.