I wrote an article on Bukit Sembawang some time in March recently which you can find here.

Bukit Sembawang has recently announced their full year 2019 results which impresses on earnings, with full year NOPAT increasing by 100% year on year despite taking a hit in their Q4 earnings. 

On the topline, revenue and cost of sales increased by 265% and 451% respectively as compared to previous year. This resulted in Gross Profit increasing by 164% year on year. 

This is attributed to the higher development sales for profits recognized from 8 St Thomas, Nim Collection Phase 1 and 2 and Watercove. Comparing to the previous year, majority of the profits were only recognized from Nim Collection Phase 1 and Watercove. 

There is a huge impairment loss that they recognized in the 4th quarter which bumped up other operating expenses on properties relating to Fraser Residence Orchard and Makeway View. This is quite interesting because they had only recently bought Makeway View for $168m in March 2018 at around $1,600 psf and already by the financial year end they are recognizing $10m worth of allowance for foreseeable losses. It could be that the RNAV was already lower than what they initially purchased. 

I wonder if they are doing that prudently because they always clawed it back the following year. For instance, in the previous year FY2018, they had clawed back their allowance of foreseeable losses on their development properties of $35m. 

From a cashflow perspective, it didn't look good this year as we already know that they are buying up the two tender enbloc deals for Katong Park Towers for $345m and Makeway Views for $168m. These properties will yield profits and cashflow eventually for them so it's a matter of time before their cashflow would ballooned again. 

In terms of dividends, I was expecting lower for this financial year because their cashflow look a bit tight but I thought 22 cents (4 cents + 18 cents) was a nice gesture from the management. It would require them around $57m to pay out the 22 cents to shareholders which will be reflected in the next financial result. 

At 22 cents, this would translates to about 3.9% yield at the current share price of $5.66 so I think it's a decent play for shareholders to wait. 

This is assuming we are looking at the property cycle to get better. Otherwise, we should be expecting lower margins and further impairments in the future financial results.

Thanks for reading.