SINGAPORE, Oct 27 — Hiap Hoe Limited says its Singapore property sales are facing slow growth in Q2FY14.

The developer of Treasure on Balmoral, Skyline 360, Waterscape at Cavenagh, The Beverly and Oxford Suites soft launched another project, HH @ Kallang in May and expects to receive its temporary occupancy permit in 2016.

Days Hotel Singapore and Ramada Singapore recorded positive contributions and stable room occupancies at Zhongshan Park.

However, it warns its hospitality division is facing challenging times due to rising costs and fewer tourist arrivals, while its retail and office components maintain near-full occupancies.

It says it is cautious, while it aims to build up recurring revenues and a regional presence.

Hiap Hoe launched a 7-storey, 269 room Four Points by Sheraton Hotel in Melbourne’s Docklands, which it expects to complete by the end of 2017.

The company just announced earnings for Q2FY14:

Revenue: -65.4 per cent to S$27.8 million (RM71.4 million)

Profit: (S$5.7 million) to S$29.3 million

Cash flow from operations: S$8.1 million vs S$26.7 million

The decrease in revenue was mainly due to a fall of S$74.8 million in sales income and project income.

The decrease in sales income was due to lower progressive revenue recognition from Waterscape at Cavenagh, with additional 1.7 per cent revenue recognised in Q2 2014 compared with 11.4 per cent revenue recognised in Q2 2013.

The decrease was also due to its booking of revenue from the sale of units at the Signature at Lewis and Skyline 360 totalling S$46.3 million in the same quarter last year.

The decrease in project income was due to the absence of revenue from construction of the hotel/commercial properties at Zhongshan Park, which were completed in Q2 2013.

These decreases were offset by an increase of S$5.6 million in rental revenue generated from investment properties in Australia which were acquired in Q4 2013 and Q1 2014, and from SuperBowl, S$4.3 million rental revenue, S$9.9 million revenue from hotel operations and S$2.5 million revenue from its leisure business.

In connection with an internal restructuring exercise, it sold its remaining units in Skyline 360 and Signature at Lewis to HH Residences Pte Ltd on 23 September 2014 for S$42 million in cash.

Hiap Hoe’s interest income doubled to S$27 million as it purchased more commercial papers and placed about S$35.6 million in fixed deposits.

1. How much weaker will the Singapore property market get?

It remains cautious about the Singapore private residential property market.

2. Can it repay its debt, since the company has insufficient amount of cash?

Hiap Hoe has secured borrowings of S$287.6 million repayable in less than a year, and S$400.3 million worth of borrowings due in more than a year.

How are they going to repay its loans when it only has cash of S$72 million?

3. Can it rely on its Marina Tower Melbourne project to boost its business?

Marina Tower Melbourne is its first overseas development located in the Docklands area of Victoria’s state capital.

On 17 July, Hiap Hoe denied an article entitled “HIAP HOE’s Melbourne Project 85 per cent sold In 1 Week” on Nextinsight dated 16 July 2014.

So, how many units in the Marina Tower Melbourne has it sold so far?

4. What is the progress of its Docklands project?

The Docklands project is expected to be completed by the end of 2017.

What is the progress of the project?

What is the completion percentage so far?

Is the development going according to plan?

5. What is the long term or short term outlook for its regional expansion?

So far, we only know that it launched its first mixed development at Melbourne’s Docklands and expects to complete it by the end of 2017.

What is its outlook on its regional expansion in the short and long term?

6. What is its order book?

Basic question, but we couldn’t find any mention of it.

Management reply: Thank you for the message and interest in Hiap Hoe. Hiap Hoe would like to give this media opportunity a miss. — Investor Central

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