• Perennial Real Estate Holdings’ 2Q/1H18 core net profit was below our projections.
• Perennial International Health and Medical Hub (PIHMH) opened in Jun; other China development projects are being progressively developed.
• Singapore properties enjoyed high occupancy; Capitol Kempinski Hotel to open in Oct.
• Maintain ADD with an unchanged Target Price of S$0.99.

2Q Results Highlights

Perennial Real Estate Holdings (PREH) reported a 2Q18 EBIT of S$41.9m, -26.5% y-o-y, on a 1.6% improvement in revenue to S$18.1m. Stripping out revaluations and other one-off gains, EBIT would have been marginally higher y-o-y.

Net profit fell a greater 49.5% y-o-y to S$8.6m, eroded by lower EBIT and higher finance cost due to the consolidation of Capitol Singapore’s debt and new loans to fund new investments.

For 1H, net profit came in at S$13.8m, -75.3% y-o-y. Excluding one-offs, we estimate the group would have recorded a core net loss in 1H18 of S$12.9m, below our expectations.

Source: CGS-CIMB Research - 06 Aug 2018