First Sponsor Group Limited: 2H2025 & FY2025 Financial Analysis

First Sponsor Group Limited (“First Sponsor” or “the Group”) has released its financial results for the second half (2H2025) and full year (FY2025) ended 31 December 2025. Amidst challenging market conditions, particularly in the PRC property sector, the Group reported a net loss, driven primarily by non-cash derivative losses and impairment charges, while demonstrating resilience in its European property portfolio and maintaining a robust financial position. Below is a comprehensive analysis of their latest results.

Key Financial Metrics and Results Table

Notes: 1H2025 figures are inferred based on full year less 2H2025. “n.m.” indicates not meaningful due to negative swing.

Key Results and Analysis

• Significant Net Loss Driven by Non-Cash Items:
  The Group reported a net loss of S\$97.7 million for 2H2025 (2H2024: net profit of S\$81.1 million), largely due to a net unrealised mark-to-market loss of S\$58.6 million from financial derivatives and net impairment charges/fair value adjustments of S\$23.3 million related to PRC development projects and investment properties.
  For FY2025, net loss was S\$78.8 million (FY2024: net profit of S\$93.0 million). If excluding these two negative factors, adjusted net profit would have been S\$5.6 million for 2H2025 and S\$20.3 million for FY2025.
• Revenue and Gross Profit:
  Revenue declined 4.7% YoY in 2H2025 and 8.1% YoY for FY2025, reflecting weaker sales in PRC property development and a lower average PRC property financing loan book. Gross profit was marginally down YoY but showed slight improvement QoQ.
• Dividend Proposal:
  The Board recommended a final tax-exempt dividend of 3.69 SGD cents per share, bringing total FY2025 dividends to 4.79 SGD cents per share, a 3% increase YoY. This signals confidence in the Group’s long-term prospects despite current losses.
• Strong European Property Performance:
  The Group’s European property portfolio, particularly office and hotel income, continued to improve, with net operating income rising to €28.6 million in 2H2025 (2H2024: €27.3 million) and €53.3 million for FY2025 (FY2024: €52.6 million).
• Financial Position and Gearing:
  As at 31 Dec 2025, net gearing stood at 0.56x, with over S\$520 million in cash and undrawn facilities, providing a strong liquidity buffer.

Historical Performance and Trends

• The Group’s asset base has been shifting from PRC-focused to a more diversified portfolio, with increasing exposure to Europe and Australia. PRC asset exposure has fallen steadily from 79.2% in 2015 to 57.8% in 2025.
• Non-cash fair value losses and impairments have sharply moderated from S\$73.8 million in FY2024 to S\$23.0 million in FY2025, though PRC property impairments remain a drag.
• The Dutch office portfolio, after several years of fair value losses due to rising interest rates, recorded a modest gain in FY2025 thanks to improved operating performance.
• The European hotel portfolio recovered well post-pandemic, with EBITDA improvements driven by higher occupancy, cost controls, and operational efficiency.

Exceptional Expenses and Asset Revaluations

• The main exceptional expense was the S\$76.1 million net P&L loss for FY2025 from financial derivatives used for hedging foreign currency exposure. This was nearly offset by a S\$67.7 million translation gain on net assets of foreign subsidiaries, leaving shareholder equity largely intact.
• Impairment charges were mostly related to PRC development properties and investment assets, reflecting the continued weakness in the PRC property market.

Divestments, Acquisitions, and Corporate Actions

• The Group increased its stake in NSI N.V., a Dutch commercial property company, to 29.98%, remaining its single largest shareholder.
• Acquired an additional 17% equity interest in Allianz Tower Rotterdam, increasing its stake to 50%.
• Disposed of its remaining 49.5% interest in the Wentang Recycling Factory, contributing a S\$4.0 million gain.

Macroeconomic and Market Factors

• The PRC property market continues to face weak demand and slow sales, with little sign of meaningful improvement despite government support measures.
• The Group’s foreign currency hedging strategy remains appropriate given the global macroeconomic volatility.
• European travel and hotel demand have rebounded, supporting recurring income streams.

Chairman’s Statement

“The Board recommended a final tax-exempt (one-tier) cash dividend of 3.69 Singapore cents per share for FY2025. If approved, the total dividend declared for FY2025 will be 4.79 Singapore cents per share, representing a 3% growth from FY2024. This reflects the Board’s confidence in the long-term prospects of the Group, notwithstanding the prolonged challenging market conditions in the PRC and the accounting losses reported for 2H2025 and FY2025.”

The Chairman’s statement strikes a cautiously optimistic tone, highlighting confidence in long-term prospects despite near-term headwinds and reported accounting losses.

Forecasted and Expected Events

• The opening of the Puccini Hotel Milan in early 2026 and the expected completions of Live Tower, Drive Tower, and Prins Hendrikkade in Amsterdam during FY2026 are set to further boost recurring income.
• The Sydney House Hotel, scheduled for completion in 3Q2027, will be owner-managed, reflecting the Group’s growing confidence in hotel operations.
• The Group is prepared to take over management of two Chengdu Wenjiang hotels after the expiry of the IHG agreement in December 2026.

Conclusion and Investor Recommendations

Overall Assessment: The Group’s financial performance in 2H2025 and FY2025 appears weak on the surface due to large non-cash losses from derivatives and PRC property impairments. However, the underlying business—especially the European property and hotel portfolios—shows resilience and improving recurring income. The Board’s decision to raise dividends despite the reported loss, and the Group’s strong liquidity and gearing position, indicate confidence in long-term value creation.

• If you are currently holding the stock: Consider maintaining your position if your investment horizon is medium- to long-term. The Group’s robust balance sheet, improving European operations, and rising dividends suggest that the current accounting losses are largely non-cash and temporary, tied to challenging PRC market conditions and currency hedging. Monitor for any further deterioration in PRC asset values or significant negative developments in Europe.
• If you are not currently holding the stock: Investors seeking exposure to European commercial and hospitality real estate with a strong balance sheet and a rising dividend track record may consider accumulating on weakness, especially if the share price reflects the recent accounting losses. Caution is warranted given continued uncertainties in the PRC property market and potential for further volatility in derivative valuations.

Disclaimer: This analysis is based strictly on the company’s published financial report and does not constitute financial advice. Investors should consider their own investment objectives and risk tolerance, and consult a qualified financial advisor before making investment decisions.