KLCCP Stapled 4Q18 earnings drop 46.9% to RM184m

However, the group’s overall revenue for 4Q improved by 4.1% due to higher contribution from the management services segment

By FARA AISYAH / Graphic By TMR

KLCCP Stapled Group’s net profit dropped 46.85% year on-year to RM183.66 million in the fourth quarter ended Dec 31, 2018 (4Q18), due to lower fair value adjustments to investment properties.

In an exchange filing yesterday, the company — comprising KLCC Property Holdings Bhd (KLCCP) and KLCC Real Estate Investment Trust (REIT) — posted RM20.05 million of fair value adjustments during the three months, compared to RM182.48 million recorded a year ago.

The profit before tax (PBT) and revenue for its property investment in the office segment remained flat in 4Q18, while property investment in its retail segment’s PBT and revenue increased 7.57% and 5.81% respectively, as a result of higher rental rates coupled with higher occupancy.

The company’s hotel operations reported a 93.27% decrease in PBT from October to December 2018 mainly due to higher depreciation on the fully refurbished rooms, while the 5.27% drop in revenue was mostly contributed by the drop in the food and beverage segment due to intense competition in the banqueting market.

As for the management services, KLCCP Stapled posted a 1.3% decrease in PBT in 4Q18, while revenue increased by 16.5% due to additional income from special projects under the facilities management operations.

The group’s overall revenue for the quarter improved by 4.06% YoY to RM366.35 million due to higher contribution from the management services segment.

With 2019 expected to see continued challenges in the market in light of the current global economic outlook, KLCCP Stapled said the group will remain steadfast to focus on its core competencies in key market segments.

“The Mandarin Oriental Kuala Lumpur (KL) Hotel is expected to face increased competition from more key inventories coming into the market, despite showcasing its fully refurbished guestrooms.

“On the other hand, the retail segment will focus on strengthening its position, reimagining consumer experience and integrating the mall as a lifestyle, while the office segment will continue as the mainstay providing stability to the group,” it said in a statement.

The group’s stabilised and wholly owned assets, which include the Petronas Twin Towers, Menara ExxonMobil and Menara 3 Petronas are under KLCC REIT.

Its non wholly owned assets and assets with development and redevelopment potential — which include Suria KLCC, the Mandarin Oriental KL Hotel and a vacant land (Lot D1) — are under KLCCP.

KLCCP, which also has a 33% stake in Menara Maxis, declared a fourth interim dividend of 4.63 sen for its financial year 2018.

On the other hand, KLCC REIT announced a fourth interim income distribution of 6.27 sen, both to be paid on Feb 28 this year.

KLCC REIT gai ned RM422.86 million after it had undertaken a revaluation exercise on the Petronas Twin Towers, Menara ExxonMobil and Menara 3 Petronas in October.

The fair valuation gain for the group recognised in the statement of comprehensive income is RM12.04 million.

According to KLCC REIT, the revaluation for the properties was conducted pursuant to Clause 10.02(b) of the Securities Commission Malaysia’s guidelines on listed REITs, whereby a revaluation of real estate in the REIT’s investment portfolio should be carried out at least once every financial year.

The exercise was also done pursuant to Malaysian Financial Reporting Standard 140: Investment Property to ascertain the current market value of the properties, the trust said.