Dear Shareholders,
Over the past 18 months, the COVID-19 pandemic situation continues to evolve globally and locally. The COVID-19 virus in its original and mutated forms continue to spread globally leaving many countries alternating between “lockdowns” and easing of restrictions, coupled with strict enforcement of precautionary safety measures. The need for physical office spaces has also fluctuated significantly due to the shift to an increasing remote working environment. At the same time, the closed borders and travelling restrictions also affect the Group’s ability to source for and evaluate new overseas investment opportunities.
Despite the challenging operating environment due to the pandemic, Chuan Hup Holdings Limited (“Chuan Hup” or “the Group”) recorded a net profit of USD 13.29 million for the financial year ended 30 June 2021 (“FY2021”), a turnaround from the loss of USD 17.12 million for the financial year ended 30 June 2020 (“FY2020”). This was mainly attributable to the mark-to-market gain of USD 3.21 million on financial investments, fair value gain of USD 1.17 million on investment properties and foreign exchange gain of USD 6.61 million. The Group also recorded a positive share of results of associates of USD 2.18 million in FY2021, due to contributions from Finbar Group Limited and Keyland Ayala Properties Inc., as compared to a net loss of USD 1.11 million in FY2020.
The Group recorded a revenue of USD 19.58 million, a decrease of 22.4% in FY2021 as compared to USD 25.23 million for FY2020. The revenue decrease was mainly attributable to lower sales contribution from development property projects Concerto and One Kennedy.
The Group has shown resilience in its financial position and cashflow. Net assets attributable to equity holders of the Company increased by 5.0% to USD 256.53 million as at 30 June 2021. Cash and cash equivalents as at 30 June 2021 remain positive despite the 17.6% decrease to USD 90.11 million as compared to USD 109.36 million as at 30 June 2020. Net cash generated from operating activities was USD 5.93 million. Net cash used in investing activities was USD 23.73 million. This was mainly attributable to property development loans granted to an associate and joint venture. Net cash used in financing activities of USD 6.76 million was due to the payment of dividends in respect of FY2020.
Though the COVID-19 pandemic slowed global growth in early 2020, precautionary safety measures implemented by governments have allowed space for some recovery. The Australia residential property sector has seen strong price stability returning to Sydney and Melbourne, and this is expected to spread to more affordable markets such as Brisbane. The residential property sector in Western Australia also forecast the requirement for additional apartments to meet the growing demand for city living due to its long-term population trend and economic growth.
In October 2020, the Group continues to strengthen its property development portfolio by further partnering Finbar Group Limited, its associate and strategic partner, in a joint venture to acquire and develop a development land site located in the Perth city precinct of Western Australia.
The development land site is centrally located with frontage to Hay Street, Plain Street and De Vlamingh Avenue in East Perth and located directly opposite Queens Garden. Leveraging on Finbar’s experience in property development, the development land site will be transformed into a mixed-use project comprising approximately 340 residential apartments to be developed as two towers. These residential apartments will be positioned above 1,400 square metres of ground floor commercial space, which supports retail, and food and beverage use, and will include the conservation of the former Materials Science Building on the corner of Hay Street and Plain Street which has heritage significance.
To further tap on the property demands in other parts of Australia, the Group also partnered the Siera Group, a boutique residential property developer and builder, in a joint venture to acquire and develop a development land site located in Surfers Paradise, Queensland.
Established in Brisbane in 2014, the Siera Group specialises in medium-density housing, luxury homes, and small lot subdivisions in South-East Queensland. Its current portfolio comprises a mix of luxury apartments and terrace homes and has developed more than 70 residential dwellings in key growth markets in South-East Queensland.
Through the joint venture, the Group will leverage on the Siera Group’s expertise in residential property development in Queensland, Australia to develop a joint venture development site located at 39, 41 and 43 Darrambal Street Surfers Paradise. The joint venture development site, which is centrally located on the exclusive Chevron Island, situated between the heart of Surfers Paradise and the Gold Coast CBD in the suburb of Southport, will be developed into a mixed-residential tower comprising approximately 83 residential apartments across 14 levels.
The Group believes that both development projects will not only allow it to expand its footprints in Australia, but this would also enable the Group to further build much resilience and sustainable earnings for its future business developments and growth.
In Singapore, a collective sale exercise for the office units in GB Building is currently being explored by strata unit owners of the building, of which the Group holds three floors of office properties.
As the world focuses on the transition from a pandemic to an endemic phase with on-going vaccinations to ensure that a certain level of normalcy be restored, the operating environment for FY2022 will remain challenging for the Group.
In Singapore, many firms and companies are looking to allow workers to work from home till mid-2021 as the government pushes for full vaccination in the country. The recovery of the office rental market is expected to be gradual, in line with Singapore’s expected economic recovery. However, this might not be a uniform recovery across all office buildings as telecommuting may remain as the default working arrangement with possible resurgence of transmission clusters and appearance of new variants of the virus.
Residential markets in Australia may have shown remarkable resilience in 2020 despite the COVID-19 pandemic propelled by continuing low mortgage rates, fewer homes for sale, and the resurgence of first-time home buyers.
Continued border closures and travel restrictions will affect the Group in sourcing for and evaluating new overseas investment opportunities. Against the backdrop of uncertainties in the global economy from the resurgence of transmissions of COVID-19 variants and risks from trade and geopolitical tensions, the Board and management will continue to monitor the operating environment and exert cautiousness in assessing any new investment opportunity which may arise
The Board is pleased to recommend a final tax exempt onetier dividend of 1 SG cent per ordinary share and a special tax exempt one-tier dividend of 1 SG cents per ordinary share for FY2021, amounting to SGD 18.51 million.
In such times of adversity, I would like to express my gratitude for the wise counsel and guidance of the Board to help navigate these difficult times, as well as our management and staff for their hard work and dedication in creating the best value out of the Group’s business.
Finally, I would also like to thank our shareholders and other stakeholders for their continued confidence and trust, as we weather these challenging times together, to build a better and brighter future for Chuan Hup.
