AF Global Limited: 1H2025 Financial Results Analysis

AF Global Limited, a Singapore-listed investment holding company with operations spanning real estate, property management, and hospitality, has reported its unaudited condensed interim financial statements for the half-year ended 30 June 2025. This analysis presents key financial metrics, year-over-year comparisons, notable business developments, and the outlook for the Group.

Key Financial Metrics

Historical Performance Trends

• Revenue decreased marginally (-2% YoY) due to lower occupancy rates at key hospitality assets, namely Holiday Inn Resort Phuket (HIRP) and Somerset Vientiane (SV). This was attributed to softer tourist arrivals impacted by US tariffs, regional conflicts, and local safety concerns.
• Despite the revenue dip, the Group swung from a net loss of S\$0.8 million in 1H2024 to a net profit of S\$3.5 million in 1H2025. The turnaround is mainly due to the absence of one-off impairment losses related to the Rawai Disposal in Phuket, Thailand, which materially impacted results last year.
• The hotel and serviced residence division reported a pre-tax profit of S\$4.7 million in 1H2025, up S\$4.4 million YoY. Excluding the Rawai Disposal’s impact, underlying pre-tax profit rose by S\$1.4 million, helped by lower depreciation as certain assets reached full depreciation in 2024.
• Other segments (Property and Corporate) remained stable, with property segment profit comparable to 1H2024 and the corporate office reporting a reduced pre-tax loss due to lower finance costs.

Exceptional Items and Notable Expenses

• Impairment and One-Off Items: The significant loss in 1H2024 was due to a S\$2.98 million impairment charge on the Rawai Disposal, followed by a total loss on disposal of S\$6.62 million recognized in 2H2024.
• Legal Expenses: Higher legal fees were incurred in 1H2025 due to the compulsory liquidation of the joint venture company in Xuzhou, China.
• Foreign Currency Losses: These were lower in 1H2025 compared to 1H2024, as 1H2024 included pronounced losses from Thai Baht depreciation on SGD-denominated inter-company balances (written off after the Rawai Disposal).

Asset Revaluation and Fair Value Adjustments

• No revaluation of property, plant, and equipment occurred in 1H2025; the last independent valuations were in December 2024 and 2023. Management has assessed that carrying amounts remain materially aligned with fair value.
• Investments in Xuzhou entities (China) saw a fair value decrease due to weaker Renminbi. The compulsory liquidation process is ongoing, with two unsuccessful auction rounds and a third round scheduled at a lower reserve price. A further write-down may be required if bids remain absent.

Divestments and Corporate Actions

• Rawai Disposal: The sale of Phuket assets was completed in July 2024, impacting prior period results but not 1H2025.
• No Dividends for 1H2025: The Board decided to conserve cash for working capital, contrasting with a special interim dividend of S\$0.015 per share paid in 1H2024.

Related Party Transactions

• Interest income of S\$0.36 million was received from Aspial Corporation Limited and its subsidiaries, consistent with prior periods.
• Proceeds from sale of investment securities to related parties totaled S\$2.5 million in 1H2025.
• Routine corporate service fees and rental/maintenance expenses were paid to related parties.

Macroeconomic and Segment Developments

• The Group’s hospitality assets faced headwinds from global economic uncertainties and geopolitical tensions, affecting travel and occupancy rates.
• Competition from new hotels in Vientiane, Laos, impacted SV revenue.
• Knight Frank Pte Ltd group (Singapore) remains stable and continues to contribute positively.
• The Group indicates intent to unlock value and improve capital efficiency, suggesting potential asset disposals or portfolio optimization ahead.

Chairman’s Statement and Board Commentary

While the full Chairman’s Statement is not provided, the Board commentary conveys a cautious and pragmatic tone. They acknowledge external headwinds, ongoing legal and liquidation processes in China, and the need for prudent capital management, including suspension of dividends for the period.

Conclusion

The Group’s financial performance for 1H2025 shows a marked improvement over the prior year, primarily due to the elimination of exceptional losses and continued cost controls, especially in depreciation and finance costs. The outlook remains neutral to cautious: while core hospitality assets are resilient, external macroeconomic and geopolitical risks persist, and the outcome of the Xuzhou investment liquidation may require further adjustments. Management’s decision to withhold dividends underscores a focus on cash preservation and operational prudence as they navigate the current environment.

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