Thursday, March 28, 2024
 
Columnist
Martin Hennecke
 
FE CONSORT INTL
HKEx Stock Code : 00035 
 
Corporate Profile
Principally engaged in property development and investment, hotel operation, car park operation, and treasury management.

Business Review - For the year ended March 31, 2013

Property division

The business of the Group's property division includes property development and investment property holding.

The Group's investment properties comprise mainly retail and office buildings located in Shanghai, Hong Kong and Singapore. As at 31 March 2013, these properties were valued at approximately HK$2.4 billion. A fair value gain of approximately HK$299 million was recorded in respect of the Group's investment properties during the financial year ended 31 March 2013. Revenue from investment properties for the financial year ended 31 March 2013 decreased to approximately HK$62 million, representing a decrease of 7.1% as compared with last financial year, due to a disposal of an investment building in Singapore during the financial year.

The Group has a diversified portfolio in property development which is located in Australia, Shanghai, Guangzhou, Hong Kong, Kuala Lumpur and Singapore. To cater for the Group's local development needs, the Group has established strong local teams for property development at these locations. The diversification allows the Group to take advantage of the different property cycles in different regions. This strategy has resulted in a relatively low land cost base for the Group's development projects. Most of the Group's property developments are focused on mass residential market in Asia Pacific where the Group can benefit from the growing affluence of the middle class. As at 31 March 2013, the Gross Floor Area (¡§GFA¡¨) in our property development pipeline reached approximately 10 million sq. ft., which is sufficient for the Group's development in the coming 6 to 7 years. The Group is also aggressively looking for residential sites in the regions to add to its pipeline.

As at 31 March 2013, total cumulative contracted presale value of properties under development amounted to approximately HK$4.9 billion. Completion and delivery of the developments are expected in the coming three years. As revenue will only be recognized when sales of property development are completed, the above presale was not reflected in the consolidated income statement.

In total, the Group has 12 projects of approximately 5.4 million sq. ft. in GFA currently under various stages of development across the regions. The Group targets to launch 4-6 new projects in the current financial year. Among these, the Group has launched Sevilla Crest in Sai Yeung Choi Street North, Sham Shui Po, Hong Kong consisting of approximately 39,000 sq. ft. in GFA and ¡§Midtown at Upper West Side¡¨, the Stage 3 of Upper West Side consisting of 282 apartments. Other new residential development projects planned for launch include projects in Guangzhou (Huadijiayuan), Shanghai (The Royal Crest), Hong Kong (Hill Road, West Point) and Malaysia (Lot 470, JalanImbi, Kuala Lumpur). The presale initiative will secure revenue for the Group in the coming years.

Australia

Currently, the Group's focus in Australia is the Upper West Side project which is a high rise residential development located at central business district in Melbourne. The total development consists of more than 1.3 million sq. ft. in GFA. In April 2013, a piece of land with site area of approximately 12,000 sq. ft. adjacent to the current Upper West Side development was added to the residential development portfolio. In June 2013, the Group acquired another piece of land (next to the current Upper West Side development) with site area of approximately 1.176 hectare and expected to develop 3,000 residential apartments. Currently the site is with a planning permit for residential development to build a sellable area of approximately 2.2 million sq. ft.. The said acquisition added approximately 20% to the current development land bank of the Group.

Stage 1 of Upper West Side development consists of 700 apartments. During the financial year ended 31 March 2013, approximately 80% of apartments were settled. The remaining balance is expected to be settled in the coming financial year.

Stage 2 of Upper West Side development (named ¡§Madison at Upper West Side¡¨) consists of 584 apartments. As at 31 March 2013, contracted presale value of the Stage 2 reached approximately HK$1,948 million, amounting to approximately 94% of Stage 2 development. Completion of Stage 2 is expected to be in the financial year ending 31 March 2015.

Stage 3 of Upper West Side development (named ¡§Midtown at Upper West Side¡¨) consists of 282 apartments. As at 31 March 2013, contracted presale value of the Stage 3 reached approximately HK$229 million, amounting to approximately 24% of the Stage 3 development. Construction works will commence soon and the development is expected to be completed in the financial year ending 31 March 2016.

With the success of the first 3 stages, the Group is currently finalizing the development plan for Stages 4 and 5 (the newly acquired land) of Upper West Side. Subject to planning approval, Stages 4 and 5 are expected to comprise 630 apartments and 420 apartments respectively.

Mainland China

The Group's Shanghai California Garden is a township development, of which approximately 4,000 residential units have been built and sold. This development comprises a diversified portfolio of residences including low rise apartments, high rise apartments and houses. One of the phases, namely ¡§The Royal Crest¡¨ consisting 288 low rise residential apartments (approximately 270,000 sq. ft. in GFA) was launched during the year and was 100% presold as at 31 March 2013. The total presale value was approximately HK$593 million. The development is expected to be completed in financial year 2014. Currently developments of a further 1,000 residential apartments and 130 houses with a total GFA of approximately 1.2 million sq. ft. are underway. Completion is expected to be in financial years 2014 and 2015.

In Guangzhou, the Huadijiayuen project, located in Liwan district, consists of approximately 1 million sq. ft. in GFA. Construction works has commenced and 5 blocks of residential buildings with approximately 600 high rise apartments are being constructed. Presale and completion are expected to take place in financial years 2014 and 2015 respectively.

Hong Kong

The Group has been actively building its development pipeline in Hong Kong. Currently, there are 6 residential development projects. The Group will continue to increase its land bank through acquisition of redevelopment sites as well as participating in government tender or auction.

Star Ruby, located at No. 1¡V11A, San Wai Street, Hung Hom, Kowloon, commenced its presale during the year. As at 31 March 2013, the total presale amounted to HK$511 million, representing approximately 74% of the development. The project comprises 124 high rise residential apartments with approximately 66,000 sq. ft. in GFA. The development is expected to be completed in the financial year 2015.

Sevilla Crest, located at No. 287¡V293, Sai Yeung Choi Street North, Sham Shui Po, commenced its presale in the second half of the financial year 2013. As at 31 March 2013, total presale was approximately HK$110 million amounting to approximately 23% of the development. The development consists of 39,000 sq. ft. in GFA. Completion is expected in the financial year 2015.

No. 684, Clearwater Bay Road, Sai Kung is a residential redevelopment project by converting 6 old villas into 4 new villas, with a total GFA of approximately 20,000 sq. ft.. The development has been completed and put in market for sale.

The Group's development project at No. 90¡V100 Hill Road in Pok Fu Lam, consists of approximately 45,000 sq. ft. in GFA. The project is now in the final planning stage following the Group's complete acquisition of the entire ownership of the site in the second half of last financial year.

The Group's development project at Tan Kwai Tsuen, Hung Shui Kiu in Yuen Long, consists of approximately 50,000 sq. ft. in GFA. The project is to build 24 townhouses and now under development. Completion is expected in the financial year 2015.

In November 2012, the Company acquired 90% ownership of a residential redevelopment site located at No. 68¡V86 Wan Fung Street, Wong Tai Sin, Kowloon. The development site consists of approximately 91,000 sq. ft. in GFA. The Group now has more than 94% ownership of the site and is still in the process of acquiring the remaining stake. The development is still in a planning stage currently.

Malaysia

Dorsett Bukit Bintang is a residential project adjacent to Dorsett Regency Kuala Lumpur. The project consists of approximately 220,000 sq. ft. in GFA. The Group is currently planning the launch of the presale and the project is expected to be completed in the financial year 2016.

Dorsett Place Waterfront Subang is a 50:50 joint venture between Dorsett and Mayland Valiant. This development is adjacent to Grand Dorsett Subang in Kuala Lumpur and comprises 1,989 units of hotel suite apartments of two 17-storey high apartment blocks with a car park providing 1,329 car parking spaces. The total net floor area is approximately 1,000,000 sq. ft.. Presale value as at 31 March 2013 amounted to approximately HK$678 million, representing approximately 30% of the development.

Singapore

Dorsett Residences is a residential component of the Dorsett Singapore, located on the Outram Park MRT Station. The development comprises 68 serviced apartments and has been 100% presold. As at 31 March 2013, presale value amounted to approximately HK$500 million. Completion is expected to be in financial year 2014. The project is wholly owned by Dorsett.

Hotel operation and management ¡V Dorsett Hospitality International Limited

The Group, through its 73.25% owned subsidiary, Dorsett Hospitality International Limited (¡§Dorsett¡¨), operates its hotel business. For the financial year ended 31 March 2013 Dorsett recorded revenue of approximately HK$1,153 million, representing an increase of 5.2% as compared with last financial year. The increase was driven primarily from revenue growth in Hong Kong and Mainland China. Hong Kong remains the biggest revenue contributor to the Group's hotel operation, accounting for approximately 64.6% of the total hotel revenue.

Car park business

The Company's car park management portfolio comprises third-party-owned car parks and self-owned car parks located in Australia, New Zealand and Hartamas shopping mall in Kuala Lumpur, Malaysia. As at 31 March 2013, the whole portfolio consisted of approximately 50,000 car park bays with more than 270 car parks under the Group's management. In this portfolio, 20 were self-owned car parks amounting to approximately 5,600 car park bays. They are located in Australia and Malaysia. The remaining car parks were third-party-owned car parks under the Group's management. Third-party owners included local governments, shopping malls, retailers, universities, airports, hotels, hospitals, government departments and commercial and office buildings. During the financial year ended 31 March 2013, approximately 25 car parks with 900 car park bays were added to the Group's management portfolio.

For the financial year ended 31 March 2013, the Group's car park division generated revenue of approximately HK$567 million, representing an increase of 5.6% as compared with last financial year. The division recorded steady growth and will continue to contribute to the recurring income of the Group.

On 30 May 2012, the Group acquired 2.3% of the total issued share capital of Care Park Group Pty Ltd (¡§Care Park¡¨). Following the transaction, the Group increased its shareholding in Care Park to 76.05%.

Business Outlook - For the year ended March 31, 2013

Global economies are expected to remain challenging although there are signs of recovery in the US economy. Tightening measures targeted at the property sector in mainland China, Hong Kong and Singapore are affecting overall market sentiment. However, the Group believes that the fundamental demand for mass market residential housing in these regions remains strong. The Group will continue with the presale program of its pipeline projects to lock in revenue for future years. The Group will also strive to add new projects to its pipeline and is actively seeking opportunities in Asia. The Group's aim is to achieve a sustainable long term growth in earnings through constant replenishment of our land bank.

On hotel division, the Group expects room supply in Hong Kong to increase. However, the Group believes that occupancy rate is likely to be supported by continued growth in inbound, specifically from mainland China as the country's consumers' spending continue to increase and the Renminbi remains strong versus other currencies. With the stabilization in operation of newly opened hotels and the additional new hotels in this financial year, the Group expects the growth for the hotel division mainly comes from room additions.

The Group's foundation for growth is good and it remains confident it can continue to bring long term growth to its shareholders.

Source: Far East Consortium (00035) Annual Results Announcement
Chairman David CHIU Issued Capital (shares) 1,773M
Par Value HKD 0.1 Market Capitalisation (HKD) 4,591M
 
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