TRAVEL services company Morning Star Holdings says its net profit fell 95.9 per cent in its fiscal first-half ended June 30 to just $135,000, from $3.2 million over the same period in 1994. Turnover fell 24.4 per cent to $401.7 million. Directors have once again recommended no interim dividend be paid. With a slowdown in overall consumer spending in Hong Kong, Morning Star Travel said turnover fell in the first half. In addition to this, it said there was a drop in the number of travellers to Japan as a result of the Kobe earthquake, the Sarin gas incidents on Tokyo underground and the appreciation of the yen. 'An increase in the number of passengers to destinations other than Japan could not help the situation,' said group managing director Choo Teow Meng. To cut dependence on the package tour business, Mr Choo said the company had set up a mail order department which had got off to an encouraging start. A second volume of mail order products is being prepared and will be issued during the second half of the year. As for the core holiday business, the company said it would launch new destinations during the second half. Mr Choo said parent company Morning Star Holdings' performance had also been adversely affected by weak sentiment in Hong Kong towards the mainland property market. The group has a 55 per cent stake in phase one of Morning Star Villa, a real estate development in Zhongshan has been completed. Phase two is nearing completion. In view of unfavourable market conditions, the company said it had held back much of its marketing until the second half. However, Suzhou Huaxing, a 50:50 joint venture in Suzhou, has continued to market parcels of its land in the Kun Shan Development Area. Mr Choo said the group's property division would continue to explore opportunities for further real estate development in China. Morning Star Holdings (Australia), a 69.5 per cent owned Australian subsidiary, posted an unaudited consolidated net profit of A$305,101, HK$1.76 million) compared with the A$51,529 loss in the same period a year earlier. The company owns four hotels, namely the Grosvenor Hotel in Adelaide, the Victoria Hotel and the Sheraton Hotel in Melbourne and Vista Hotel Alice Springs. Mr Choo described their first-half performances as encouraging.