Prime Lands Residencies 2Q performance helped by strong demand for housing

Prime Lands Residencies PLC reported robust sales and profits for the three months to September, its second fiscal quarter, as the company is riding on the strong demand for real estate and housing.

The company reported revenues of Rs.2.41 billion during the quarter under review, up one percent from the same period last year. Despite the extremely modest annual growth in the top line, the sales nearly doubled from Rs.1.29 billion in the three months ended in June 2021, reflecting the strong demand despite
the pandemic. 

“With the continued availability of relatively low-cost financing opportunities from banks and financial institutions, due to the prevailing interest rates, the demand and appetite for residential real estate remain strong,” the company said in an earnings release yesterday. 

The company reported a net profit of Rs.506.3 million for the quarter or 56 cents a share, compared to the earnings of Rs.345.9 million or 46 cents a share in the same period last year.  The company’s share ended at Rs.9.50 yesterday, adding 30 cents or 3.26 percent. 

The earnings were supported by lower taxes booked for the period, lower finance cost and surge in other incomes. The budget gave 50 percent tax holiday in corporate profits for companies listed on the Colombo Stock Exchange before end of this year but it isn’t immediately clear if the low taxes booked for the period is due to the tax concessions.  Despite the higher pre-tax profits, the company booked Rs.66.7 million in corporate income tax, down 39 percent from the same period last year. Prime Lands Residencies in May raised Rs.1.95 billion in an initial public offering of 187.5 million shares at Rs.10.40 a piece.

The company has utilised 79 percent of the IPO proceeds it raised by September 30, with 100 percent of the allocation made, for acquiring a Meegoda land, settling the revolving import loans taken for The Grand and working capital requirement for The Palace Gampaha, fully used up. The settlement of part of its loans as well as the significant decline in the general market lending rates helped the company to bring down its finance cost by 27 percent to Rs.94.5 million in the three months, buttressing the profits. 

By the end of September 2021, the company had Rs.11.8 billion worth of apartment properties. 

The company, which is the market leader in the affordable luxury housing segment, has apartment units priced at from Rs.20 million up to Rs.300 million, the company said in a statement. 

Prime Lands (Pvt.) Limited has an 80 percent stake in Prime Lands Residencies.