Rich Development Inc (力麒建設) yesterday reported a sharp jump in net income last quarter after booking profits from a new housing project, but said it was cautiously optimistic about its business outlook this quarter and next year.
The company recorded a net profit of NT$617 million (US$20.07 million), or earnings per share (EPS) of NT$0.83, in the July-to-September quarter, an increase of 75.85 percent from the same period last year, the Taipei-based builder said in a statement.
For the first nine months of the year, Rich Development posted a cumulative net profit of NT$1.14 billion, or EPS of NT$1.53, already surpassing the sum for the whole of last year, it said.
ACCOUNTING CHANGES
The company attributed the earnings improvement to the completion of a new upscale housing project in Taipei’s Zhongzheng District (中正), allowing the company to book profits under new accounting rules.
In the past, builders could book gains in keeping with the progress of the construction work.
The company, whose business covers construction, water treatment and hotels, was cautiously optimistic about its prospects.
The property market remains sluggish and is unlikely to see a pickup next year, Rich Development chairwoman Kuo Shu-chen (郭淑珍) told reporters, as the government may continue to curb housing price hikes.
Rich Development achieved an above-industry average pre-sale ratio of 40 percent for the two new home projects it launched last quarter and this quarter, which Kuo attributed to their prime locations and use of quality building materials.
“Developers and builders need to stay positive and underscore their brand value to survive difficult times,” she said.
The property market may emerge from the cloud of political uncertainty after the mayoral elections next week, but may enter the woods again soon, as political parties brace for the presidential election in early 2016, Kuo said.
The property market is likely to be flat next year, she said, as housing unaffordability tops the public’s list of concerns and become a hot topic on the campaign trail.
Rich Development is looking to diverisfy its investments, but will maintain its focus on real-estate development, Kuo said.
DIVERSIFICATION
The company has expanded into water treatment, led by its subsidiary Forest Water Environmental Engineering Ltd (山林水工程), which will debut on the emerging stock market in January and is planning to invest in China next year.
In addition, Rich is to raise stakes in the hotelier business next year by constructing more five-star hotels in local scenic spots, Kuo said.
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