On behalf of the Board of Directors, we are pleased to present the Annual Report of HONG FOK CORPORATION LIMITED (the “Company”) and its subsidiaries (the “Group”) for the financial year ended 31 December 2017 (“FY 2017”).
REVIEW OF FY2017
In the fourth quarter of 2017, the Group was proud to open the doors to its hotel, YOTEL Singapore Orchard Road (“YOTEL”). Together with contributions from the sales of residential units of Concourse Skyline, the Group posted revenue of approximately $70 million for FY2017, as compared to approximately $58 million for 2016.
During the year, the Group recorded a gain from the disposal of subsidiaries of approximately $9 million. More significantly, the Group also recorded a higher gain on revaluation of its investment properties, resulting in the Group posting a profit of approximately $223 million in FY2017, as compared to a profit of approximately $82 million in 2016. Consequently, the Group’s profit attributable to owners of the Company was approximately $178 million for FY2017.
PROSPECTS FOR FY2018
In the recent Singapore Budget 2018, the Government increased the Buyers’ Stamp Duty by 1%, from 3% to 4%, for homes valued above $1 million. The Government has stated that this marginal increase is part of its progressive tax system for generating revenue and the measure is widely seen as not intended to be a property cooling measure. On balance, this incrementally higher stamp duty seems unlikely to significantly impact the Singapore residential property market.
With properties prices rebounding after a sustained bear market, the boost in market sentiment points to a likely recovery of the residential property market in Singapore. These market conditions should support sales of the Group’s Concourse Skyline.
On the hospitality front, statistics from the Singapore Tourist Board (“STB”) showed that Singapore hit a record high in tourist arrivals and spending, having received 17 million visitors for FY2017. Similarly, tourist receipts rose 3.9% to $26.8 billion for the year.
For 2018, the STB expects further growth for the tourism sector, forecasting visitor arrivals to grow 1% to 4% to be in the range of 17.6 million to 18.1 million, while tourist receipts are expected to grow between 1% and 3%.
The Group is encouraged by the performance so far of YOTEL, which the Group believes represents a unique product offering in the market. The Group is therefore exploring other possible investment or business opportunities in the real estate market.
On behalf of the Board, we would like to thank our tenants, customers, bankers, business associates and shareholders for their continued support for the Group. We would also like to thank our fellow Directors for their valuable contributions and the management and staff of the Group for their commitment, hard work and dedication to the Group’s success.
CHEONG PIN CHUAN
CHEONG SIM ENG