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Shang Properties profits drop on lower condominium sales

Posted on August 28, 2011 09:59:08 PM [ BusinessWorld Online ]

SHANG PROPERTIES, Inc., the listed development arm of the Malaysia-based Kuok Group, posted a 4.67% drop in second-quarter profits from year-ago levels as the inventory of units for sale from a luxury building dwindled, data from a financial report filed with the local bourse showed.

Shang Properties said it recorded a net income of P261.55 million for the April-June period, lower than the P274.36 million posted in the same period last year.

Revenues declined by 9.74% to P714.49 million from P791.61 million last year.

This, as condominium sales fell by 44.13% to P179.34 million from P320.99 million.

Condominium sales included those from developments One Shangri-la Plaza, The Shang Grand Tower, and the firm’s newest project, The St. Francis Shangri-la Place.

“The decrease was mainly due to lower condominium sales of The St. Francis Shangri-la Place. The said project is now complete and 98% of its condominium units were already sold as of end of 2010,” Shang Properties said, noting that this resulted to fewer inventory units available for sale this year.

The decline in condominium sales revenues was cushioned by a 6.10% growth in rental revenues to P444.20 million from P418.65 million, on the back of sustained tenant sales growth and rental escalation at Shangri-la Plaza Mall.

Growth in rental revenues also stemmed from improved average occupancy at the Edsa Shangri-la Hotel and The Enterprise Center, which is owned by KSA Realty Corp. but managed by Shang Properties, the report stated.

Meanwhile, expenses declined by 12.92% to P330.23 million in the second quarter from P379.22 million following lower advertising expenses, among others.

The second-quarter results brought first-half net income to P461.78 million, just 1.03% higher than the P457.07 million recorded in the same period last year.

Revenues from January to June fell by 6.14% to P1.371 billion from P1.460 billion, while expenses also fell by 8.13% to P652.43 million from P710.19 million.

Shang Properties is looking to expand its residential portfolio in Taguig City via a deluxe 500-room hotel and residential development dubbed Shang Residences at the Fort that is slated for completion in two years.

Early this year, Shang Properties acquired more than P600 million worth of property in Makati City from a unit of construction firm Phinma Corp., with plans to spend P4 billion-P4.5 billion for a new high-rise residential project on the site of the old Asian Plaza building.

Its parent firm, the Kuok Group of Companies, has 47 properties worldwide, including in Beijing, China, Hong Kong, Singapore, Malaysia, Indonesia and other parts of Southeast Asia.Shang Properties’ shares closed lower by 2.08% to P1.88 apiece last Friday from P1.92. -- Franz Jonathan G. de la Fuente
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