MCL Land gets boost from The Estuary writeback

US$51m writeback helps bring MCL's Q1 net earnings to US$48.7m

A WRITEBACK of about US$51 million for an impairment charge on The Estuary condo in Yishun helped to boost MCL Land's first-quarter net earnings to US$48.7 million. In the same period of last year, it posted net profit of US$1.4 million.

'The group's results for 2010 should benefit from the completion of two development projects in Singapore, Waterfall Gardens and D'Pavilion, as well as the writeback of the impairment charge on The Estuary,' MCL chairman YK Pang said in yesterday's results statement.

MCL recognises revenue and profit on units sold in residential property developments when the projects receive Temporary Occupation Permit. Unlike most other listed property groups, it does not book profit and revenue progressively as the projects are completed.

Waterfall Gardens at Farrer Road and D'Pavilion at Upper Serangoon Road are slated for completion by Q2 and Q4 this year respectively. The 132-unit Waterfall Gardens is fully sold and 74 per cent of D'Pavilion's 50 apartments were taken up as at end-Q1 this year.

The Hongkong Land subsidiary writes back impairment charges on residential sites when the projects are launched and substantially sold.

Following the writeback on The Estuary, which MCL began to sell in February this year, the group continues to carry US$134 million in impairment charges against four other Singapore residential projects - on the Nob Hill site in Ewe Boon Road, the Nim Park site at Nim Road, the Dynasty Garden Court 1 plot at Sixth Avenue, and the Casa Nassau site at Upper East Coast Road.

The plan is to launch the Nim Road and Upper East Coast projects next year but hold back developments on the two other sites until the market improves further, MCL's chief executive Koh Teck Chuan told BT.

MCL had shareholder funds of US$583 million at end-March 2010, up from US$533 million at Dec 31, 2009. Progress payments received for the group's development properties continued to enhance MCL's financial position with net cash of US$140 million at end-Q1 2010, compared with US$93 million at end-2009.

'Sentiment in Singapore's residential property market remains positive, underpinned by an improving economic outlook,' Mr Pang observed.

MCL's net asset value per share rose from US$1.44 at end-December 2009 to US$1.58 at end-March 2010.

It posted earnings per share of 13.15 US cents in Q1 2010, up from 0.38 US cent in Q1 2009. On the stock market yesterday, the counter closed unchanged at S$2.22.

Source: Business Times, 30 Apr 2010