Heeton Holdings has reported a 221% y-o-y increase in earnings for the 2HFY2024 ended Dec 31, 2024 of $3.85 million. However for the full year FY2024, the group is still loss making. 

 

For the 2HFY2024, earnings per share came in at 0.79 cents per ordinary share. For the FY2024, earnings per share were a negative 0.28 cents per share. 

 

Heeton&rsquo s revenue for the 2HFY2024 grew 10.5% y-o-y to $41.1 million, and for the FY2024, it grew 15.2% y-o-y to $78.2 million. 

 

The group says its turnover for the 2HFY2024 comprises rental income from investment properties, hotel operation income and management fee. Its turnover for the year ended Dec 31, 2024 increased 15.2% y-o-y due to higher occupancies in the United Kingdom and increase in rental rates for the group&rsquo s investment properties. 

 

During 2024, the group disposed of some of its subsidiaries, mainly its 70% interest in Gloucester Corinium Avenue Hotel Limited and Ensco 1154 Limited, resulting in a net gain of $3.78 million.

 

Property, plant and equipment amounting to $418.83 million comprised mainly hotel properties, in which there was an increase of $16.92 million in FY2024 due to the acquisition of a hotel in Edinburgh, United Kingdom. The effect of the appreciation of Pound Sterling and reversal of impairment changes offset by the disposal of hotels in Japan and the United Kingdom and depreciation charges recognised. 

 

On cash flow, the group saw a decrease in cash and cash equivalents of $32.70 million due to some major cash inflows and outflows. This includes proceeds from the disposal of property, plant and equipment of $26.43 million and proceeds from disposals of subsidiaries of $11.37 million.

 

On cash outflows, the group had a net repayment of loans from associated and joint venture companies of $24.45 million, additions to property, plant and equipment of $40.36 million, and restricted cash pledge for bank facility of $22.98 million. 

 

The group says that with Singapore&rsquo s economic outlook facing greater uncertainty and an uncertain geopolitical paradigm under Trump&rsquo s administration, it will maintain its prudent and steady strategic expansion. 

 

As the hospitality industry continues to face headwinds such as high operating and labour costs, elevated interest rates, and an uncertain macroeconomic environment, Heeton will build on being a bespoke boutique brand offering high quality, experiential stays for its guests.

 

Heeton continues to participate in land tenders in the local residential market such as government housing schemes, often as part of a consortium. Notwithstanding this, Heeton&rsquo s two retail malls are also expected to continue to generate steady and recurring income for its property investment business.

 

The group is declaring a final dividend for the current financial period of 0.5 cents per share. 

 

Real estate conglomerate Heeton Holdings is expecting to report an improvement in its profit after tax for the FY2024 results ended Dec 31, 2024, compared to a net loss in the same period a year ago. 

 

This is due to better business performance and one-off gains on disposal of subsidiaries and property, plant and equipment. 

Heeton Holdings&rsquo Bhutan hotel is expected to be launched in the second quarter of 2025.

 

The five-star luxury resort, named Dawa at Hilltop by Heeton, is located in Paro and is said to be the largest in the country with 87 rooms.

 

As of Dec 31, 2024, Heeton&rsquo s hospitality portfolio comprises 15 properties in the UK and Asia. In its Jan 6 statement, the group says it remains focused on expanding its Heeton Concept Hotels brand this year.

 

&ldquo 2024 has been a landmark year for Heeton, marked by strategic entries into new hospitality markets like Singapore and the continued growth of our hospitality portfolio. We are confident in our ability to leverage the global tourism rebound and create unique guest experiences while delivering strong financial performance,&rdquo says Hoh Chin Yiep, CEO of Heeton.

 

&ldquo As we look ahead, we aim to solidify our position as a leading boutique player in the global hospitality industry,&rdquo he adds.

 

Heeton Holdings says its wholly-owned subsidiary, Heeton Capital, has entered into a shareholders&rsquo agreement with Astra Horizon Ventures and NineCo Investments in relation to a proposed joint venture, according to a Dec 3 bourse filing. 

 

Under the agreement, a new joint venture (JV) company, QS Edinburgh, has been incorporated in SIngapore to acquire the entire equity interest of a target company, which owns an aparthotel. The aparthotel comprises 82 keys and is located in Edinburgh, UK. 

 

The acquisition is expected to be partly funded by equity contribution and shareholders loans from the groups&rsquo shareholders. 

 

According to Heeton Holdings 5DP , the proportion of the loans to be contributed by each of the JV Partners will be in proportion to their respective shareholding in the JV company. The shareholding proportion of Heeton Capital, Astra Horizon Ventures and NineCo Investments stands at 85%, 10% and 5%, respectively. 

 

The joint venture is expected to provide Heeton Holdings with an opportunity to develop sustainable and recurring revenue streams to achieve potential enhancement of shareholder value, and expand its investment portfolio, adds the group. 

 

Upon completion of the proposed acquisition, Heeton Holdings is set to provide hotel management services to the JV company or its subsidiaries.

On Nov 1, Heeton Holdings : 5DP 0% alternate director Toh Gap Seng acquired 100,000 shares at an average price of S$0.25 per share. This increased his total interest from 5.86 per cent to 5.88 per cent.

 

He was appointed as alternate director to executive chairman Toh Giap Eng in January 2022. With over 30 years of experience in property development and investment, he currently serves as the executive director of Hong Heng.

 

On Sep 3, Heeton announced it had entered the Singapore hospitality market by acquiring Capri by Fraser Changi City as part of a joint venture. The hotel will be revamped and rebranded as Dorsett Changi City Singapore, with Dorsett Hospitality International taking over operations. This acquisition marks Heeton&rsquo s first hotel investment in Singapore, and aligns with its strategy to expand in the hospitality industry.

Shares in Heeton Holdings  5DP closed flat at 26 cents on Nov 4. 

Mainboard-listed Heeton Holdings 5DP 0.00% has announced its acquisition of a hotel in Singapore, Capri by Fraser Changi City, as part of a joint venture consortium. 

 

The boutique hospitality company has recently entered into a new joint venture, &lsquo Dorsett Atelier Capital Heeton Changi&rsquo , with Atelier Capital Changi and Dorsett Hospitality International (DHI). 

 

As part of the acquisition, DHI will be taking over the hotel operation and is set to rebrand the hotel to &ldquo Dorsett Changi City Singapore&rdquo . 

 

Hoh Chin Yiep, CEO of Heeton, says: &ldquo The acquisition marks our first foray into the local hospitality market and is part of our expansion strategy in the hospitality industry.&rdquo  

 

Currently situated in Changi Business Park, the group says that the hotel is ideally suited to serve business or leisure travellers from the nearby Changi Airport, especially with the airport&rsquo s upcoming Terminal 5. 

 

On the back of the continued post-pandemic recovery of Singapore&rsquo s tourism sector, the group says that the hotel is well-positioned to generating a steady and recurring income for Heeton Holdings. 

 

The addition of the hotel&rsquo s acquisition brings the group&rsquo s portfolio up to 14 hotels in operation worldwide. 

 

This comes alongside the group&rsquo s upcoming hotel in Bhutan Paro, Dawa at Hilltop by Heeton, which is expected to launch in the second quarter of 2025. 

 

More updates are expected to follow with further material developments.

 

Heeton Holdings, formerly a wet market owner in the late 1960s, has evolved significantly. Its first joint venture with Koh Brothers Development to develop Sun Plaza in Sembawang marked a pivotal moment. The development was launched in November 1999 with 93 speciality shops, including a supermarket, post office, library, cinema and food court. Sun Plaza later underwent a two-year-long asset enhancement initiative (AEI), completed in August 2015, to expand the mall by 5,772 sq ft and boost the total net lettable area to around 158,000 sq ft.

 

In 2011, Heeton entered the hospitality sector, owning and operating hotels. The group ventured into hospitality assets as part of its diversification strategy from property development. This move aims to establish a more stable stream of recurring income for the company.

 

Heeton&rsquo s foray into hospitality began after the 2008 Global Financial Crisis, which significantly impacted various property markets. The group&rsquo s initial venture was to acquire two Thai hospitality properties. &ldquo We thought that it was a good idea to diversify into the hospitality segment,&rdquo says Ivan Hoh, CEO of Heeton Holdings 5DP -1.85% , in an interview with The Edge Singapore. &ldquo In the property development business, we will frequently experience lumpy earnings. But our hospitality segment helps to contribute a constant stream of recurring income.&rdquo

 

Since diversifying in 2011, Heeton has expanded its portfolio to include 14 hotels: Nine in the UK, three in Japan, two in Thailand, one in Bhutan and one under construction in China. Initially a hotel property owner, Heeton has since ventured into hotel operations, launching its brands in Thailand, the UK and Bhutan. In Japan, however, hotels are operated by a local partner.

 

&ldquo As a developer, Heeton has expertise in real estate. But now, as a hotel operator, we can also better control our costs and devise better plans for sustainability and maintenance of the property,&rdquo explains Hoh.

 

The company engages a third-party management company to help manage the manpower and operations in its overseas properties. &ldquo This is cheaper than franchising a popular hotel brand,&rdquo adds Hoh, adding that this is how the Heeton Concept Hotel brand was born. Heeton is keen to expand its house brand, focusing on the property&rsquo s location. According to Hoh, the brand should align with the location and they may opt for an international brand if necessary. Hoh notes that a prime location paired with the right brand can lead to higher average daily rates (ADR) for the property.

 

Still in the red

 

During its latest FY2023, ended December 2023, Heeton recorded an overall loss of $3.18 million due to higher interest rates on its bank borrowings. Finance expenses were 46.4% higher y-o-y at $27.4 million.

 

Hoh adds that the company was not immune to inflation and had to endure higher costs of various kinds. Revenue showed improvement as the markets where its hospitality business operates have begun opening up and tourism has been improving in these markets. The company&rsquo s revenue comprises rental income from investment properties, hotel operating income and management fees.

 

Revenue was 7.8% higher y-o-y to $67.9 million from $62.9 million a year ago due to increased hotel operation income, as its hotels in the UK enjoyed higher occupancy rates. Heeton&rsquo s property development segment is accounted for under the share of results from associated and joint venture companies. This approach reflects its involvement in development projects primarily through joint ventures or consortia.

 

Traditionally, it has partnered with KSH Holdings, Lian Beng Group and Oxley Holdings 5UX 1.12% to develop domestic and international projects and acquire assets.

 

Share of results from associated companies and joint venture companies was a loss of $1.14 million in FY2023 compared to gains of $3.8 million in FY2022. This was mainly due to lower profits recognised for a development project after obtaining TOP and increased financial expenses.

 

Over the past five years, Heeton&rsquo s share price has been confined to between 18.3 cents and 26.1 cents. The share price over the past 12 months has not moved. Trading volume is also typically low, with no analysts&rsquo coverage. As of June 30, 2023, the company&rsquo s net asset value was 88 cents, which, at its Mar 20 share price of 27 cents, implies a P/B of 0.31 times.

 

Hoh does not agree that the stock is a &ldquo value trap&rdquo . &ldquo A lot of value can still be extracted from the company. We are not exactly conservative, but we are careful and selective in going into investment and opportunities to extract the best benefits for shareholders.&rdquo

 

He attributes the group&rsquo s significant financial setback to the pandemic, largely stemming from its extensive hospitality portfolio. The group is rebuilding its business as the global economy rebounds from the health crisis.

 

Hospitality and retail revamp

 

Like many property companies, Heeton has a relatively high gearing, which, according to Bloomberg, stands at 94.7%, while net gearing came in at 80.7%. Hoh says: &ldquo For a company this size, the gearing aligns with the industry norm. Heeton is quite comfortable with the gearing at this level under the current economic and business climate.&rdquo

 

&ldquo Having said that, the company will constantly review its financial position at regular Treasury meetings.&rdquo

 

On the outlook, Hoh adds: &ldquo We will remain focused on our core businesses, development and hospitality. We will now assess where to grow our hospitality portfolio and bid on development tenders in Singapore.&rdquo

 

He remains optimistic about the hospitality market in Japan and continues to seek acquisitions in that region, particularly in Osaka and Kyoto. Hoh highlights Japan due to the prevailing low-interest rate environment and the weak Japanese yen. Additionally, he notes the resurgence of tourism in Japan as a contributing factor to their focus.

 

Heeton is also planning to expand its presence in the UK and is set on acquiring a second property in Edinburgh, Scotland. Hoh says continental Europe, as a larger market, has &ldquo always been on the mind&rdquo , but this requires economies of scale and Heeton will look into it when the opportunity arises.

 

In Singapore, the company is still bidding for land developments and is interested in executive condos (EC) due to its fast sales turnaround, albeit with lower margins. It is also looking to develop properties in sectors other than residential, such as manufacturing, industrial, logistics and data centres.

 

&ldquo We will still mostly bid in a consortium if the deal is big. It helps to spread the risk if we do it in a joint venture, we can do more projects,&rdquo says Hoh. Heeton will also try bidding for government land sales (GLS) sites in Singapore or seek collective sales.

 

Meanwhile, Heeton is looking to beef up its retail mall team. It has two retail malls under its portfolio: Sun Plaza and Tampines Mart.

 

Tampines Mart, situated at Tampines Street 32, serves as a wet market and mall. Completed in 1992, this marked Heeton&rsquo s inaugural venture into non-residential properties. It is also the first neighbourhood market centre developed and operated by a private enterprise within an HDB estate. On its revitalisation plans, Hoh says: &ldquo We want to change the tenant mix in the two malls and bring in brands that are crowd pullers.&rdquo