ECONOMYNEXT - Sri Lanka's Access Engineering says a transition from construction into a real estate firm is seeing early results with apartment and office pre-sales on track to bring more profits, Chairman Sumal Perera has said.
"In the long term, especially following 2020, our real estate projects of Capital Heights and Marina Square Colombo will contribute extensively to our bottom line," Perera told shareholders in the annual report.
"We are also hoping to extend Access Tower II by adding a new wing dubbed Tower III,"
"Our drive is to position ourselves as a key player in the real estate sector, and maintain leadership."
When Access Engineering listed in 2012, the construction business contributed 95 percent to group revenue, but was down to 58 percent in 2017/18.
Property and real estate contributes just 1.9 percent to group revenue. The balance comes from automobile sales (31.35 percent) and construction material sales (9.88 percent).
There were concerns that the real estate market is overheated, but may have cooled since then.
The construction industry has a lot more room to grow with the development of the Colombo Port City project, Perera said.
"Our short to medium-term strategy remains the same with the main focus being on our core business lines of engineering and construction," he said.
--Diversification—
Access Engineering established itself specialising in infrastructure projects building roads, bridges and water and drainage systems, and Sumal Perera says he'll be disappointed if Access Engineering remained a construction company 10 years from now.
Access Engineering is diversifying into real estate, building high-rises for rent income to bring a steady revenue stream and also to increase the group's net asset base.
(Read about Access Engineering's real estate and other diversification strategies here: https://echelon.lk/home/access-to-real-estate-company-from-construction/).
Capital Heights comprising 242 luxury apartments will be completed in 2020 with 40 percent of the apartments already sold. Access Engineering holds a 50 percent stake in the project.
Marina Square is a mixed development project comprising 1,068 condominium apartment units and around 150,000 square feet of commercial space, has recorded presales of 25 percent.
Marina Square is owned by Harbour Village Private Limited a joint venture between Access Engineering, China Harbour Engineering and Musthafa's Singapore and will overlook the Colombo Port.
Access Engineering holds over 60 percent of Harbour Village.
Access Tower 2, built and owned by Access Engineering commenced operations early 2018.
"The A-Grade, office tower of 200,000 square feet of rentable office space was preleased three months prior to opening," Perera said.
The 30-storey Access Tower 2 was built at a cost of 5.3 billion rupees and has parking facilities for 300 vehicles.
Access also owns 21 acres of land though subsidiaries within the IT zone in Malabe which is proposing to build a private university Horizon Knowledge City offering tech, science, law, engineering and paramedical degrees.
Access Engineering is building 608 housing units for government employees at Borella for the Urban Development Authority costing 4.9 billion rupees.
The company completed 941 low-cost housing units comprising two bed rooms, living area and kitchen, toilet and balcony for 3.3 billion rupees, which also for the UDA.
--Real estate earnings boost--
Access Engineering saw profits fall 39 percent from a year earlier to 364.9 million rupees in the June 2018 quarter on falling margins from construction, despite improving earnings from condominium sales and rent.
Earnings were 36 cents a share in the June quarter, latest interim accounts filed with the Colombo Stock Exchange showed. The Share last traded at 15.10 rupees.
Revenue grew 10 percent from a year earlier to 5.8 billion rupees.
Real estate saw revenue increase 312 percent to 196 million rupees, with profits increasing 179 percent to 183 million rupees.
This segment which comprises rents from high-rise buildings owned by the group and apartment sales made the highest contribution to group earnings.
The construction segment reported revenue growth of 5 percent from a year earlier to 3 billion rupees, but profits fell a sharp 82 percent to 86 million rupees.
Construction material sales grew 89 percent to 894 million rupees and profits increased 106 percent to 72 million rupees.
Automobile sales increased 11 percent to 2 billion rupees but profits fell 68 percent to 41.2 million rupees.
"In the long term, especially following 2020, our real estate projects of Capital Heights and Marina Square Colombo will contribute extensively to our bottom line," Perera told shareholders in the annual report.
"We are also hoping to extend Access Tower II by adding a new wing dubbed Tower III,"
"Our drive is to position ourselves as a key player in the real estate sector, and maintain leadership."
When Access Engineering listed in 2012, the construction business contributed 95 percent to group revenue, but was down to 58 percent in 2017/18.
Property and real estate contributes just 1.9 percent to group revenue. The balance comes from automobile sales (31.35 percent) and construction material sales (9.88 percent).
There were concerns that the real estate market is overheated, but may have cooled since then.
The construction industry has a lot more room to grow with the development of the Colombo Port City project, Perera said.
"Our short to medium-term strategy remains the same with the main focus being on our core business lines of engineering and construction," he said.
--Diversification—
Access Engineering established itself specialising in infrastructure projects building roads, bridges and water and drainage systems, and Sumal Perera says he'll be disappointed if Access Engineering remained a construction company 10 years from now.
Access Engineering is diversifying into real estate, building high-rises for rent income to bring a steady revenue stream and also to increase the group's net asset base.
(Read about Access Engineering's real estate and other diversification strategies here: https://echelon.lk/home/access-to-real-estate-company-from-construction/).
Capital Heights comprising 242 luxury apartments will be completed in 2020 with 40 percent of the apartments already sold. Access Engineering holds a 50 percent stake in the project.
Marina Square is a mixed development project comprising 1,068 condominium apartment units and around 150,000 square feet of commercial space, has recorded presales of 25 percent.
Marina Square is owned by Harbour Village Private Limited a joint venture between Access Engineering, China Harbour Engineering and Musthafa's Singapore and will overlook the Colombo Port.
Access Engineering holds over 60 percent of Harbour Village.
Access Tower 2, built and owned by Access Engineering commenced operations early 2018.
"The A-Grade, office tower of 200,000 square feet of rentable office space was preleased three months prior to opening," Perera said.
The 30-storey Access Tower 2 was built at a cost of 5.3 billion rupees and has parking facilities for 300 vehicles.
Access also owns 21 acres of land though subsidiaries within the IT zone in Malabe which is proposing to build a private university Horizon Knowledge City offering tech, science, law, engineering and paramedical degrees.
Access Engineering is building 608 housing units for government employees at Borella for the Urban Development Authority costing 4.9 billion rupees.
The company completed 941 low-cost housing units comprising two bed rooms, living area and kitchen, toilet and balcony for 3.3 billion rupees, which also for the UDA.
--Real estate earnings boost--
Access Engineering saw profits fall 39 percent from a year earlier to 364.9 million rupees in the June 2018 quarter on falling margins from construction, despite improving earnings from condominium sales and rent.
Earnings were 36 cents a share in the June quarter, latest interim accounts filed with the Colombo Stock Exchange showed. The Share last traded at 15.10 rupees.
Revenue grew 10 percent from a year earlier to 5.8 billion rupees.
Real estate saw revenue increase 312 percent to 196 million rupees, with profits increasing 179 percent to 183 million rupees.
This segment which comprises rents from high-rise buildings owned by the group and apartment sales made the highest contribution to group earnings.
The construction segment reported revenue growth of 5 percent from a year earlier to 3 billion rupees, but profits fell a sharp 82 percent to 86 million rupees.
Construction material sales grew 89 percent to 894 million rupees and profits increased 106 percent to 72 million rupees.
Automobile sales increased 11 percent to 2 billion rupees but profits fell 68 percent to 41.2 million rupees.
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