Pavilion REIT Q3 earnings higher at RM63mil

 Pavilion Real Estate Investment Trust’s (REIT) earnings rose to RM63.03mil in the third quarter ended Sept 30, 2014 boosted by higher net property income but it expects the rest of 2014 and 2015 to be challenging.

In its statement issued on Thursday, the earnings were 19% higher compared with RM52.95mil a year ago.

The concerns were the potential increase in cost of some items / services due to the gradual removal of government subsidies and the impending GST implementation in April 2015. 

“Furthermore, filling up office spaces / vacancies remain a challenge with the many options available,” it said.

Pavilion REIT said income before tax for the quarter under review was RM63.0 million, which was RM10.1mil or 19% higher than Q3, 2013 mainly due to higher net property income. Distributable income was RM64.9mil or 2.16 sen per unit, consisting of income after tax of RM63mil.

Revenue increased by 8.8% to RM101.43mil from RM93.20mil. Earnings per share were 2.09 sen compared with 1.76 sen. The higher revenue was mainly contributed by rental reversion after all due tenancies have been renewed from Q3, 2013. 

“Total property operating expenses was lower by RM2.3 million or 8% as compared to Q3 2013. This was mainly due to the reversal of overprovision of assessment charges recorded in the first half of 2014 and recognition of credit / overcharge of electricity charges on one of the electricity metering system by Tenaga Nasional Bhd. 

“These were off-set by the incurrence of repair and preventive maintenance work and maintenance cost incurred for some advertising sites. These have resulted in total net property income increased by RM10.6mil or 16% in Q3, 2014 as compared to Q3, 2013,” it said.

For the nine months ended Sept 30, 2014, its earnings were RM175.29mil. This was an increase of 10.1% from RM159.17mil in the previous corresponding period.

Pavilion REIT’s revenue during the period rose to RM301.22mil from RM279.06mil.

Taking Sumatec higher

ASSET INJECTION: Firm targeting more than RM1b profit by 2018, say sources

FORMER Renong Bhd executive chairman Tan Sri Halim Saad is scaling up Sumatec Resources Bhd, which is set to make more than RM1 billion in net profit by 2018.

Halim controls 24.9 per cent of Sumatec and has been maintaining his shares since last November as he believes that the company can grow fast.

“He is not selling his shares anytime soon. He plans to build up the company by injecting more assets into it. He is eyeing some oil and gas (O&G) assets in Central Asia,” said a source.

  Sumatec expects to produce 30,000 barrels of oil a day in Kazakhstan by 2018. Sources say the company is targeting an average net profit of US$30 (RM95.30) per barrel.

“This means it will make around US$900,000 a day from 30,000 barrels, or more than US$328.5 million a year, compared with less than US$20 million currently from existing operations,” said the source.

For the financial year ending December 31 2014, Sumatec is projecting RM69 million in profits.

The firm is producing oil at the Rakuschechnoye field with Markmore Energy (Labuan) Ltd, which is 99 per cent-owned by Halim.

  Sumatec expects to produce 5,000 barrels of oil and gas a day from this field in the next three years.

It is also acquiring Borneo Energy Oil and Gas Ltd, which owns 100 per cent of Buzachi Neft LLP, for US$250 million in cash and shares.

Buzachi has two 25-year contracts  to explore and produce oil and gas in the Karaturun Vostochnyi and Karaturun Morskoi fields, also known as Buzachi Fields.

At a recent media briefing, Sumatec chief executive officer Chris Dalton said he expects the acquisition to be completed by October. 

He said the two assets will contribute US$1.62 million to Sumatec’s profits in the fourth quarter.

  Sumatec is targeting to produce 25,000 barrels of oil and gas a day from the Buzachi Fields.

  Meanwhile, Sumatec is expected to move out of its  PN17 status by next month and will submit its application to the Securities Commission soon.