First Sponsor's profits rose 28% to $113m in 2018

The increase was mainly due to higher profits generated from property financing and hotel operations.

First Sponsor ended the 2018 on a relatively high note with its profits climbing 28% YoY to $113m from $88.28m in 2017, an announcement revealed. However, revenue slipped 27.8% YoY from $384.39m to $277.36m.

The decrease was mainly attributed to $168.8m decline in revenue from the sale of properties due to lower contributions from residential and commercial units in the Millennium Waterfront project, although this was partially offset by the increase in revenue from property financing, hotel operations and rental income, the firm explained.

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Revenue from property financing surged 72.3% YoY to $82.3m from $47.8m in 2017, which was underpinned by the full year effects of loans disbursed in 2017, new loans disbursed to associates for property acquisitions and the strong demand for credit in mainland China, according to the Group’s CEO Neo Teck Pheng.

“This is also the first time since initial public offering (IPO) that the Group’s property financing segment surpassed the property development business segment as the largest profit contributor, accounting for 45.7% of FY18’s profit,” he added.

Revenue from property financing grew by $27.1m, of which $14.4m was due to a full year’s interest earned on a loan to a 30%-owned associate disbursed in late 2017, the firm explained. Meanwhile, revenue from hotel operations skyrocketed 159.4% from $16.2m to $42m, with revenue from its 24.7%-owned Hilton Rotterdam hotel contributed $19.3m since February 2018. Two Wenjiang hotels and the adjoining hotspring operations also contributed to the revenue growth.

In January 2019, the firm’s 30%-owned Star of East River project in Dongguan handed over two of the six fully sold residential apartment blocks, with the remaining four expected to be surrendered in H2 2019. During the same month, the Group acquired a bare shell 65-room hotel in Corso Buenos Aires, Milan for a total consideration of approximately $16.5m. The hotel will be fully refurbished into a hostel to tap into the youth hospitality market.

First Sponsor will also reportedly embark on a second equity fund raising exercise in a bid to strengthen its balance sheet and arm the firm with financial resources to expand.