Metro grows in China as property play

Metro grows in China as property play


Q4 net profit rises 34% to $25.6m, helped by fair-value gains


THE property development and investment division of Metro Holdings, which is better known here as a retailer, is providing a bigger share of its earnings as retail revenue dips.


For the financial year ended March 31, Metro Holdings reported revenue of $224.4 million, up 4.8 per cent from the preceding year.


On a business segment basis, its property arm accounted for $49.2 million, up from $35.9 million previously.


For FY 2008, the property division contributed $75.6 million or 87.4 per cent to group pre-tax profit, up from 84 per cent previously. But revenue from retail business eased to $176.4 million, from $179.5 million.


Net profit for the year was $65.97 million, a 3.95 per cent drop. Earnings per share dipped to 10.46 cents from 10.89.


Net earnings were up 34.4 per cent at $25.6 million for the fourth quarter, helped by $14.9 million in fair-value gains from investment properties, while revenue was down 2.69 per cent at $53.2 million.


Metro Holdings, which has office and retail properties in China, said that for the quarter, its property division revenue was $17.2 million, up from $8.9 million in the previous corresponding quarter, due to initial income from Metro City Beijing, higher income from Metro City Shanghai and a one-time recognition of service charges of $4 million.


But Metro is not neglecting its retail business. It confirmed an earlier BT report that it will open a new outlet at City Square Mall near Little India. It will also open a new retail outlet in Jakarta’s Grandaria City.


Metro Holdings occupies more than 821,000 square feet of retail space here, but its group general manager Jopi Ong said that the costs of doing retail business in Singapore is prohibitive.


‘The prices here are definitely too high.’ he said. ‘To operate a department store, you need a lot of real estate.’


Metro Holdings chairman Winston Choo, who joined the company in July 2007, added: ‘In terms of property development and investment, we have no plans for Singapore because I think the opportunities are better in China.’


And Metro’s Chinese property portfolio is set to grow as it increasingly becomes a China play.


It now has 200,000 square metres of net lettable area in China, including Metro Tower Shanghai and GIE Tower Guangzhou.


Also in China, it has 127,500 properties under development including 1 Financial Street, Metropolis Tower and EC Mall, all in Beijing.


Occupancy rates in Metro City Shanghai and Beijing, in which Metro Holdings holds 60 and 50 per cent stakes, were 99.4 and 81.1 per cent respectively.


At Metro Tower Shanghai and GIE Tower Guangzhou, in which it holds 60 and 100 per cent stakes, occupancy was 97.9 and 68.1 per cent respectively.


Metro Holdings said that the lower occupancy at GIE Tower was due to not being able to provide existing tenant KPMG with the extra floor space that it required in the building.


A final dividend of one cent per ordinary share has been proposed.


Metro Holding’s share price closed half a cent down at 78 cents yesterday.


Source: Business Times

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