Far East Orchard (O10) H1 2024 earnings summary

Executive summary

• H1 FY2024 revenue rose 7.1% to S$97.329m; profit after tax increased to S$19.7m from S$7.6m, driven by PBSA growth and higher JV earnings.

• Profit attributable to equity holders rose to S$18.2m from S$8.2m; higher finance costs and administrative expenses partly offset operating gains.

• The 49% acquisition of UK PBSA operator Homes For Students expanded operating and asset-management capabilities.

Financial highlights

• Revenue increased 7.1% to S$97.329m and gross profit rose 11.9% to S$51.436m; operating profit was S$36.4m, up 30.0%.

• Other gains and impairment losses swung to a net gain of S$1.886m from a S$2.978m loss, mainly reflecting unrealised FX gains; the prior period included a S$3.407m mixed-development impairment.

• Share of JV profit rose to S$5.920m from S$0.099m; associated-company profit increased to S$2.253m from S$1.430m.

• Operating cash flow was S$14.3m versus S$28.3m; investing cash outflow was S$26.8m, mainly due to the Homes For Students acquisition.

• Hospitality revenue was S$62.4m; PBSA revenue rose 22.8% to S$29.2m, up S$5.5m.

Outlook and guidance

• UK PBSA reservations for AY24/25 were ~92% at 30 June 2024; rental growth averaged 7.6% in 2024.

• Quincy House Singapore and The Eve Hotel Sydney were expected to open in Q4 2024; a Glasgow PBSA site planned for 273 beds was expected to start construction in Q4 2024 and complete in 2026.

• Travel recovery faces high costs, macro volatility, geopolitical tensions and weaker discretionary spending; mid-term international travel demand remains a source of cautious optimism.