Singha Estate Public Company Limited reported its total revenue of 1,306 million baht in the first quarter of 2021, which declined 40% from the same period last year. The decline was due mainly to the deconsolidation of NVD from the consolidated financial statements and coronavirus-induced impact on the hospitality business. Nevertheless, effective cost management, recognizing share of gain from joint ventures and items recorded in accordance with accounting standard resulted in 70 million baht net profit.
Singha Estate Public Company Limited reported its total revenue of 1,306 million baht in the first quarter of 2021, a 40% decline from the same period last year. The total revenue composed of revenue from residential development of 486 million baht, revenue from commercial business of 249 million baht and revenue from hospitality business of 544 million baht, and revenue from other businesses of 27 million baht.
The 40% drop in total revenue mainly attributed to coronavirus-induced impact on hospitality business along with the deconsolidation of Nirvana Daii Public Company Limited (“NVD”) from Singha Estate’s consolidated financial statement. The deconsolidation reflected the completion of the disposal of all Singha Estate’s stake in NVD on 6 January 2021. Still, the plunge in the hospitality business and the disappearance of NVD’s revenue were partially offset by 360 million baht revenue contribution from Santiburi the Residences and the consolidating revenue of FS JV Co., Ltd. (“FS JV”) in March 2021 into Singha Estate’s consolidated financial statement. Essentially, FS JV has a portfolio of 26 hotels with 2,886 keys spanning across the United Kingdom under the Mercure brand.
Mrs. Thitima Rungkwansiriroj, Chief Executive Officer of Singha Estate Plc, or “S”, revealed that in the first quarter of this year, the performance of the residential businesses in terms of revenue recognition and transfer value was as expected. 74% of revenue from residential business derived from Santiburi the Residences. With regards to The ESSE Sukhumvit 36, its transfer process was still at a good pace. Singha Estate has been consistently handing over condominium units at such projects since last year. As this project is a joint venture project between Singha Estate and Hongkong Land, its performance was presented under the share of the gain from the joint venture at 99 million baht.
In respect of the commercial business, Singha Estate still managed to let out additional space as well as renew the space under the existing lease contracts. Consequently, the average occupancy rate rose significantly to the level of 90% in the first quarter of the year.
Nevertheless, the latest wave of the COVID-19 pandemic since late 2020 still puts tremendous pressure on the hospitality business. However, it came to Singha Estate that there was an investment opportunity for future growth which can reduce the impact of COVID-19 crisis at the same time. In February 2021, Singha Estate group decided to increase its own portion to become the single shareholder in FS JV of which business mainly focuses on investing and developing hotel properties. At present, FS JV has a portfolio of 26 hotels with 2,886 keys spanning across the United Kingdom under the Mercure brand. Regarding performance track record, FS JV has been delivering such a strong operating result and maintained Singha Estate’s hotel portfolio at a well-balanced position thanks to its ability to mitigate seasonal variation.
According to the roadmap to ease the lockdown restriction announced by the UK government, domestic travel will be allowed in May while all restrictions will be lifted completely in June. Once combining such relaxing of restrictions with the fact that its major customers are domestic travelers, FS JV’s UK Portfolio Hotels is expected to notably recover in the second quarter onwards.
“High growth potential in most of FS JV’s hotel coupled with the launch of UK government’s tourism stimulus measures in the near future strongly confirm that increasing stake in FS JV at 13.75 million pounds is the right decision. This investment was made on the right asset, at the right time, and for the right cost. Singha Estate is fully convinced that FS JV would definitely become its major growth engine. Not only does FS JV generate revenue to offset the deconsolidation of NVD’s revenue, but also creates a stable long-term growth,” Mrs. Thitima said.
In spite of the 40% decline in revenue, Singha estate still achieved a reported net profit of 70 million baht for the period. Interestingly enough, this profit was announced after three consecutive loss-making quarters. The return to profit-making has mainly resulted from effective cost management, 99 million baht share of the gain from handing over units at The ESSE Sukhumvit 36, and items recorded in accordance with accounting standards.