28 February 2011

SC Global Developments Ltd: FY10 results lifted by subsidiary AVJ

SC Global Developments Ltd (SC Global) experienced a 153% jump in net profit to S$144mil for FY10.It exceeded our FY10F forecast and consensus estimates by 2% and 29% respectively. Revenue was 9% higher YoY at S$878mil attributable to a new project - Seven Palms Sentosa Cove (Seven Palms) making its maiden contribution. We noted that SC Global also managed to sell a penthouse unit at The Boulevard Residence (completed in 2006) during 4QFY10.

On another positive note, subsidiary, AV Jennings Ltd (AVJ) improved from a loss-making position in CY2009 to AU$17mil for CY2010 despite hiving off its contract building operations. A cut in manpower by AVJ trimmed its operating expenses by over half to S$16mil in FY10.

Gross margin improved by 11% to 35% in FY10. This is the first year that margin had trended above 30% since consolidating AVJ's results. It demonstrated AVJ's success in restructuring its business around land development and integrated housing.

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