Rich Development Inc (力麒建設) yesterday said it might not launch any new projects this year if policy uncertainty continues to keep buyers on the sidelines.
The Taipei-based developer, whose business interests span wastewater processing and hotel operations, posted a modest net profit of NT$58.9 million (US$1.92 million) in the first quarter, with core businesses accounting for less than 50 percent, company spokesman Ko Hsian-ren (柯賢仁) said.
The results translate into earnings of NT$0.08 per share, declining 11.1 percent from the same period last year, company data showed.
“The retreat is because unfavorable policy measures have weighed on the property industry,” Ko said by telephone.
Rich Development will continue to build new homes this year, but may delay their launch to the fourth quarter or early next year, Ko said, referring to a NT$17 billion pre-sale project on Songjiang Road and another worth NT$1.2 billion on Guling Street in the capital.
Both projects are aimed at the high-end market given their locations and high land costs, Ko said.
The Guling project is to feature an 11-story building with 10 upscale apartment units measuring 80 ping (264m2) each, Ko said.
As for the Songjiang project, the company needs more time to sort out construction and pricing details, he said.
Ongoing unfavorable developments warrant a cautious approach, the spokesman said, as luxury homes have been the main target of selective credit controls and tax increases in recent years.
The company posted revenues of NT$123.04 million last month, down nearly 60 percent from a year earlier, it said in a Taiwan Stock Exchange filing. Cumulative sales totaled NT$561.64 million for the first four months of the year, falling 26.83 percent from the same period last year.
If delayed launches are deemed necessary, Rich Development can sell recently completed houses, as well as office and retail space valued at NT$5 billion to boost the firm’s income for this year, Ko said.
“The company has no intention of cutting prices to boost transactions as the [company’s housing] inventories all sit on prime land and the company is not in need of cash,” Ko said.
Subsidiaries Forest Water Environmental Engineering Ltd (山林水工程) and Lea Lea Hotel have been able to contribute stable income, Ko said.
Forest Water is involved in water treatment engineering, including construction of urban sewage systems and industrial wastewater treatment plants.
Lea Lea Hotel is building two five-star hotels — one in Yilan and another near Sun Moon Lake — which are scheduled to start operations next year and in 2017 respectively, Rich Development said.
Rich Development is to distribute a cash dividend of NT$0.5 per share if the proposal is approved at the company’s annual general meeting on June 15. That represents a payout ratio of 30.67 percent based on last year’s earnings per share of NT$1.63 and a dividend yield of 4 percent based on yesterday’s closing share price of NT$12.15.
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