Far East Orchard&rsquo s O10 0.00% earnings for the nine months ended Sept 30 increased by 18.8% to $7.6 million, on the back of a 36.7% growth in revenue to $134.1 million for the period.

 

The company&rsquo s hospitality business continued to recover strongly with international travel demand, driving higher occupancies and average daily rates (ADRs). Earlier in FY2023, Far East Orchard O10 0.00% &rsquo s hospitality business was impacted by Omicron triggered restrictions and border closures.

 

While the company&rsquo s operating profit for 9MFY2023 also increased by 8.8% to $40.9 million, its 9MFY2023 profit after tax was flat against year before period at $7.0 million. 

 

This was mainly due to higher operating expenses, higher financing costs driven by the rising interest environment, and the absence of one-off gains in the prior period including the de-recognition of lease liabilities recognised in the first half of FY2022, says Far East Orchard.

 

In 1HFY2023, the company recognised an impairment loss of $3.4 million on its mixed-used development in the UK due to a housing market slowdown amidst a high-interest rate environment.

 

The company says tourism demand continues to show resilience and a sustained recovery despite economic and geopolitical challenges, with international arrival numbers in Singapore reaching 84% of pre-pandemic levels as at July. 

 

As the tourism sector rebounds, the Far East Orchard&rsquo s hospitality business continues to record improved hotel occupancies and room rates across its portfolio. Year-to-date, the company has opened five hotels with approximately 550 rooms across Australia, Austria, Japan and Switzerland. In 2024, approximately 600 rooms are expected to open across Asia Pacific and Europe.    

 

The company also expects demand for its purpose built student accommodation (PBSA) business in the UK to remain strong, underpinned by demographic trends. The domestic student population entering university is expected to continue rising, while the number of international students is also set to increase, building on a record number in 2022.

 

The UK PBSA market continues to indicate a robust outlook with expectations of sustained student demand growth and an imbalance in the demand and supply of student housing that will continue to fuel rental growth, says the company.

 

The increasing university demand coupled with the supply slowdown, continues to present significant growth opportunities for the company, it adds.

52 Week High/Low :  1.110 - 0.995
So the current share price is still on the low side.

NAV for 2022 is $2.73 according to annual report.

REAL estate group Far East Orchard is expecting its hospitality business to stabilise in the next two years following a gradual recovery from the Covid-19 pandemic last year, the company said on Saturday (Apr 15).

 

Its operational priority is to grow its hospitality portfolio to 25,000 rooms by 2025 and to deepen its presence in Singapore, Australia and Japan, it said in response to questions from the Securities Investor Association Singapore (Sias) ahead of its annual general meeting on Apr 19.

 

Since the start of its FEOR 25 five-year strategy, Far East Orchard has, together with its joint venture Toga Far East Hotels, added 15 hotels under management with about 3,300 rooms across Australia, New Zealand, Germany, Japan and Singapore.

 

This year, it expects to open five new managed hotels with more than 750 rooms, it said.

 

At the same time, it plans to grow its purpose-built student accommodation (PBSA) portfolio to 5,000 beds, focusing on cities in the United Kingdom with high-tariff universities and strong student growth.

 

It added that the PBSA business segment has provided a steady stream of recurring income during the pandemic to mitigate the adverse impact of Covid-19 on its hospitality business performance.

 

Return on assets in financial year 2022 was 0.83 per cent, as the hospitality segment has not fully recovered, it said.

 

Total shareholder return for 2013 to 2022 was -28.3 per cent, said the company, noting that this is &ldquo generally in line with our development and hospitality peers&rdquo .

 

However, its three-year total shareholder return over the pandemic was 2.4 per cent, which it said is better than its peers.

 

Amid the rising interest rate environment, Far East Orchard said one of its financial priorities is to continue actively manage the impact of rising rates through interest rate hedging, repayment of borrowings and maintaining a healthy gearing ratio.

 

As at Dec 31, one-third of the group&rsquo s borrowings are hedged.

Far East Orchard O10 -2.8%   has reported earnings of $21.9 million for the FY2022 ended Dec 31, 2022, 22.1% lower than earnings of $28.1 million.

 

Earnings for the 2HFY2022 plunged by 53.7% y-o-y to $13.9 million.

 

The lower earnings were mainly attributable to the other losses during the 2HFY2022 and FY2022 compared to other gains in the corresponding periods the year before.

 

Revenue for the FY2022 increased by 32.0% y-o-y to $141.0 million thanks to the higher revenues from the group&rsquo s hospitality and purpose-built student accommodation (PBSA) businesses. The group&rsquo s hospitality business improved amid the reopening of borders and the pick-up in tourism. The higher PBSA revenue was due to the strong demand for student accommodation.

 

During the FY2022, gross profit increased by 56.7% y-o-y to $73.1 million.

 

As at Dec 31, 2022, earnings per share (EPS) for the 2HFY2022 and FY2022 stood at 2.92 cents and 4.67 cents respectively.

 

Cash and cash equivalents stood at $233.2 million as at Dec 31, 2022. The group&rsquo s gearing ratio as at Dec 31, 2022 stood at 46.2%.

 

A first and final dividend of 3 cents per share has been declared, along with a special dividend of 1 cent per share. This brings the group&rsquo s FY2022 dividend to 4 cents per share, up from the 3 cents per share in the FY2021.

 

&ldquo This is a strong set of results for FY2022 against another volatile and challenging year for the global economy and our markets. The group&rsquo s hospitality performance strengthened after a long-awaited gradual resumption of international arrivals as the pandemic eases. Our other twin-engine, the PBSA business, continued to provide stable recurring income as student demand for UK higher education remains strong against inflationary cost pressures, particularly energy prices,&rdquo says Alan Tang, Far East Orchard&rsquo s group CEO.

 

&ldquo Given the persistent macroeconomic headwinds, we remain cautious in our 2023 outlook and will maintain a healthy balance sheet through disciplined capital management to execute the FEOR 25 strategy and deliver sustainable returns to shareholders,&rdquo he adds.

 

&ldquo Looking ahead, the global economy is poised to slow down despite signs of resilience and China&rsquo s reopening. As we navigate 2023, we will be prudent in managing the downside risks while continuing to pursue yield-accretive investment opportunities. Our efforts will be concentrated on optimising the group&rsquo s portfolio to diversify revenue streams and future-proof our business to thrive in an everchanging environment while taking judicious steps to manage cost and cash flows,&rdquo he continues.

DEVELOPER Far East Orchard : O10 +1.94% has acquired a freehold student accommodation property in Southampton, UK, for a price of £ 13.9 million (S$22.9 million), said Far East in a bourse filing on Friday (Dec 9).

 

The deal is expected to be earnings accretive, as Far East estimated earnings per share to rise from 6.12 Singapore cents to 6.18 cents post-acquisition, assuming it took place on Jan 1.

 

The developer will be managing the property with an unnamed UK student accommodation operator, with the latter acting as facility manager.

 

The acquisition comes as part of the group&rsquo s efforts to expand and diversify its student accommodation portfolio in the UK, which the manager said has shown &ldquo resilience against economic downturns&rdquo .

 

The property is Far East&rsquo s first student accommodation property in Southampton.

 

Located at 1 Fitzhugh Street, Southampton SO15 2PU, United Kingdom, the plot has a site area of approximately 1,380 square metres with a total of 180 beds.

 

It is within walking distance of three Solent University campuses and stands adjacent to the Southampton Central Railway station. A new amenity block was added to the property just last year, with facilities such as a gym, cinema room, games room, large open study space and a private dining room.

 

The property was last valued at approximately £ 14.2 million, according to Jones Lang LaSalle&lsquo s valuation on Nov 25 this year.

 

Far East funded the deal in cash through external debt facilities the group had obtained through its wholly-owned subsidiary, IUKSeven.

 

Completion of the deal, however, is conditional upon the seller, Empiric (Southampton Emily Davies), undertaking and completing certain minor works. Far East expects these changes to be complete by April 2023, before the deal&rsquo s long-stop date on Apr 30.

 

&ldquo There is a favourable demand and supply imbalance of student accommodation in the UK with the return of international students following the lifting of travel restrictions, coupled with the projected domestic students&rsquo growth over the next 10 years,&rdquo said Alan Tang, group chief executive of Far East Orchard.

 

&ldquo Notwithstanding inflationary cost pressures amid increasing energy prices and rising interest rates, we remain upbeat about the student accommodation sector, which acts as an inflationary-hedged asset class.&rdquo

 

The developer has plans to grow its portfolio until it reaches 5,000 student accommodation beds by 2025. Following the recent acquisition, it currently manages 4,400 beds in the UK.

Far East Orchard has reported a net profit of $7.0 million for the 9MFY2022 ended Sept 30, reversing from the $20.8 million net loss in the 9MFY2021.

 

The higher net profit was attributable to the recovery of the hospitality sector, says the group.

 

Revenue for the nine-month period increased by 30.1% y-o-y to $98.1 million mainly due to contributions from the group&rsquo s hospitality segment on the back of the continued travel recovery.

 

The improved operating performance was also supported by the stable contributions from the purpose-built student accommodation (PBSA) and property investment segments.

 

The group&rsquo s performance, however, was offset by the weakening of the Australian dollar (AUD) and British pound (GBP), resulting in unrealised currency translation losses of $13.1 million, up from the $5.0 million losses in the 9MFY2021.

 

In its hospitality segment, the group says the business has seen the return of business and leisure travellers and that it has benefitted from the pent-up travel demand.

 

Across the group&rsquo s portfolio of properties, uplifts in occupancies and room rates were recorded, it says.

 

It adds that the prospects for the remainder of the year remain &ldquo cautiously optimistic&rdquo .

 

&ldquo However, beyond that, uncertainty in the international economic environment has tempered economic forecasts and has dampened the return to pre-Covid-19 levels in the near term. The main factors weighing on the recovery of international tourism includes rising inflation and spike in oil prices, resulting in higher transportation and accommodation costs, putting consumer purchasing power and savings under pressure,&rdquo reads the statement put out by the group on Oct 28.

 

In its PBSA segment, the group says it is not immune to the current macroeconomic headwinds. The rising cost of energy is also an immediate concern. However, it remains confident of the PBSA sector in the UK and will continue to expand its portfolio in the country when the opportunity arises.

 

On the back of inflationary pressures, the group says its business will &ldquo inevitably be affected&rdquo , maintaining a cautious outlook for the remainder of 2022 and 2023.

 

&ldquo With the relaxation of border restrictions and pent-up travel demand, our hospitality segment has turned around this year. We are heartened to reverse the losses recorded a year ago into profit year to date. Nevertheless, the group remains cognisant of the headwinds facing the businesses &ndash ongoing developments of the geopolitical and macroeconomic environment, labour shortages, escalating energy costs, inflationary cost pressures and rising interest rates, to name a few,&rdquo says Alan Tang, group CEO of Far East Orchard.

 

&ldquo At this stage, our strategy of building a lodging platform, anchored by the hospitality management services and the resilient PBSA segments, is heading in the right direction. This will help to mitigate the impact of the current global economic downturn.&rdquo

 

He adds: &ldquo In the face of mounting uncertainties and pending global economic downturn, the group&rsquo s diversified portfolio and healthy balance sheet will be effective in managing these risks, while remaining open to strategic investment opportunities.&rdquo

REAL estate group Far East Orchard has posted earnings of S$8 million for the first half ended June, improving from a net loss of S$1.9 million recorded in the year-ago period.

 

Revenue rose 15.9 per cent to S$63.7 million in H1, from S$54.9 million a year ago.

 

This was mainly due to stronger operating performance from the hospitality segment as borders opened and global travel picked up in the second quarter, the group said in a bourse filing on Wednesday (Aug 10).

 

In Singapore, the group said its hospitality business also continued to be supported by government isolation contracts in H1. It added that this is expected to extend to the end of 2022.

 

Meanwhile, its purpose-built student accommodation (PBSA) segment also contributed higher revenue on the back of a higher occupancy rate of 85 per cent for the academic year started September 2021.

 

&ldquo We have seen encouraging results in the second quarter as international travel recovery picked up. However, as optimism builds, we remain cautious and are prepared to tackle the increased global macro-economic challenges and uncertainties that could affect our business,&rdquo said Alan Tang, group CEO of Far East Orchard.

 

Moving forward, the group said it is launching 2 Australian hospitality brands &ndash Vibe Hotels and Adina &ndash in Singapore in the second half of 2022.

 

The former 88-key Regency House was rebranded to Adina Serviced Apartments Singapore Orchard in July, while the 256-key Elizabeth Hotel will be rebranded to Vibe Hotel Singapore Orchard in the last quarter of 2022.

 

Far East Orchard said the move, which was a collaboration between hospitality arm Far East Hospitality and joint venture entity Toga-Far East Hotels, is in line with efforts to diversify its source markets and attract Australian inbound tourists.

[SINGAPORE] Far East Orchard' s net profit for the financial year ended Dec 31, 2021 rose to S$28.1 million, from S$1.5 million the previous year, primarily on the back of fair-value gains on investment properties.

 

Excluding the S$44.8 million in fair value and other gains, the group would have been in a net-loss position for FY2021.

 

Earnings per share worked out to 6.12 Singapore cents, higher than the 0.35 cent of the previous year.

 

Revenue dipped 4.8 per cent to S$106.8 million for the full year from S$112.2 million the year before.

 

The decline was mainly due to the impact of the pandemic on the group' s hospitality business, as well as the lockdowns and border closures which have impeded tourism. This was partially mitigated by the demand for accommodation facilities for isolation purposes, and from companies looking to house foreign workers in Singapore, said the group in a statement on Thursday (Nov 24).

 

Contributions from its purpose-built student accommodation (PBSA) business also helped offset some of the losses from the hospitality segment.

 

Despite the ongoing Covid-19 impact on the business and the uncertainty of the recovery, the company said that it remains committed to delivering sustainable shareholder value. The board has therefore recommended a first and final dividend of 3 Singapore cents for FY2021, unchanged from the previous year.

 

Far East Orchard expects the group' s financial performance to remain under pressure as the travel and tourism sector remains subdued.

 

However, the PBSA sector remains resilient, given that the UK has reduced the number of travel restrictions which could potentially attract more international students.

 

Group chief executive of Far East Orchard, Alan Tang said in a press statement: &ldquo In the face of a challenging environment, our team actively took steps to mitigate the headwinds posed by Covid-19. The hospitality sector continues to be weighed down by changing Covid-19 restrictions. However, we will continue to persevere with our current momentum and stand ready to steer our business through these times.&rdquo

FAR East Orchard' s net loss for the half year ended June 30 widened to S$1.9 million from S$853,000 the previous year as the pandemic continues to weigh on its hospitality business amid persistent lockdowns and border closures.

 

Revenue was 15 per cent lower to S$54.9 million from S$64.9 million the previous year while loss per share stood at 0.41 Singapore cent versus 0.19 cent the previous year.

 

The decrease in revenue from its hospitality business was partly cushioned by higher revenue from the purpose-built student accommodation (PBSA) properties in the UK, said Far East Orchard in a press statement on Wednesday. This included the full six months contribution from a PBSA asset, King Square Studios, acquired in November 2020.

 

As at June 30, the group' s PBSA portfolio in the UK maintained an occupancy level of over 80 per cent. UK continues to see a record high university application for the academic year 2021/22.

 

With the easing of restrictions on in-person teaching and learning, universities have been able to structure their courses without constraints, said the group in its financial statements.

 

The group therefore remains confident of the PBSA demand and expects the pace of booking to pick up from July 2021.

 

The financial impact was also partially offset by the continued contracted business of hotels in Singapore to be used as isolation facilities and corporate accommodation requirements for foreign workers. Various government support grants also helped though most of the grants ended by June 2021.

 

Despite the challenging operating environment, the group had pushed ahead with its expansion plans for the first half of the year.

 

Its hospitality arm, Far East Hospitality, had opened three new hotels across Asia Pacific including The Clan Hotel in Singapore, Quincy Hotel Melbourne in Australia and Far East Village Hotel Yokohama in Japan.

 

Its joint venture in Australia, TFE Hotels, launched the A by Adina hotel brand in February with the opening of A by Adina, Canberra. It was followed by the completion and opening of the A by Adina, Sydney in April.

 

Meanwhile, its fourth new hotel - Oasia Resort Sentosa - at Sentosa Island is also slated to open in the second half of the year.

 

Group chief executive officer of Far East Orchard Alan Tang said in a press statement that the return to normalcy is an " arduous journey" . The team had, however, responded with efforts that have helped cushion the impact of the pandemic on the hospitality business, he said.

 

" We expect that Covid-19 will continue to impact the group' s performance. Taking a long-term approach, we remain hopeful that global tourism will slowly but surely improve as vaccination rollout progresses globally," he added.