Midland Realty loss reflects downturn in property sector
The dire state of the property sector was underlined yesterday after estate agent Midland Realty (Holdings) posted its first interim loss since listing in 1995.
The net loss attributable to shareholders amounted to $22.72 million, compared with net earnings of $329.86 million in last year's first half at the peak of property market.
The outcome mirrored disappointing results reported by developers who have seen earnings plunge amid the dramatic decline in property values and the deteriorating economy.
Midland Realty chairman Freddie Wong Kin-yip said despite the business going into the red, he remained confident about the strength of the company.
In light of the slowdown of the property sector, Midland Realty has been streamlining its operations since December, he said.
Mr Wong said branches fell to 130 from a peak of 273 last year.
The closure of branches resulted in a $26.69 million exceptional loss during the period.
Midland Realty made a $16.1 million provision for the reduction in value of its shops which were held for long-term investments and a $3 million loss from the sale of two investment properties. These two items combined to slash operating profit 99.1 per cent to $3.63 million from $402.76 million.
Midland Realty owns 40 shops of which 12 are held for investment purposes.
Losses per share were 3.82 cents against earnings per share of 54.94 cents in the same period last year. Directors did not declare an interim dividend.
In the second half of last year, Midland Realty took a $119 million provision for bad and doubtful debts as a number of buyers chose to forfeit down payments, not to complete purchases, or had difficulty paying commissions due to the downturn in property prices.
Midland Realty said during the latest period it made a write-back of $21.5 million from those provisions.
The company has net debts of more than $200 million mainly on mortgage lendings and cash-on-hand of more than $230 million.
Mr Wong said commission income received by the company during the first six months mainly came from the primary market, a situation he called 'unhealthy'.
He suggested the Government should relax the 70 per cent mortgage lending ceiling to revitalise the secondary property market.
