Eastern Housing's shifting focus from building apartment to land development has proved to be a right way to go about business when prices of construction raw materials have shot up.
The business ended FY23, a year marked by 30-35 per cent rise in apartment prices, unscathed securing more than 25 per cent growth in profit to Tk 688 million, compared to the previous year.
The company has been cautious in taking up construction work due to the abnormal price hikes of building materials, said a senior official of the company requesting not to be named.
"We were very much selective while taking apartment projects," he added.
Meanwhile, the company has continued to purchase land at Jahurul Islam City in Aftabnagar for its second and third phases. It has a target to acquire 300 bighas of land for the two extended projects, the company official said.
Overall, high prices of land and apartments coupled with a significant jump in finance income from short-term deposits contributed to the surge in yearly profit.
The company's short-term investments amounted to Tk 5.07 billion while it had Tk 350 million deposited in the Bangladesh Bank, according to its financial statements.
The earnings per share (EPS) went up to Tk 7.37 for FY23 from Tk 5.88 for the year before, according to a stock market filing on Wednesday.
The board of directors declared 25 per cent cash dividend for FY23, the highest in five years since FY18, the year it paid 25 per cent cash dividend to shareholders.
Eastern Housing is yet to disclose the annual sales revenue for FY23. However, its nine months' revenue was Tk 1.69 billion through March this year, a 33 per cent decline from the same period a year ago.
Of the revenue in July-March of FY23, Tk 1.49 billion came from selling plots while apartment sales fetched only Tk 193 million.
Though the revenue dropped, the company gained 22 per cent higher profit to Tk 449 million in the nine months to March this year. During the time, the company's finance income more than doubled to Tk 188 million.
So, the sole listed realtor made a profit of Tk 239 million in the fourth quarter.
Company secretary Salim Ahmed could not be reached for comments.
Some building projects of the company are about to be completed, namely Suraiya Centre at Banani, Nabarun at Mirpur and Cascade at Banasree.
Eastern Housing has been successfully navigating the real estate market when sales of properties and launching of new housing projects have slowed down amid the ongoing economic crisis.
Costlier raw materials pushed up apartment prices by 30 per cent to 35 per cent depending on the size and location, as per an assessment by the Real Estate and Housing Association of Bangladesh (REHAB).
The price hike and economic uncertainties resulted in a 17 per cent year-on-year drop in flat sales to about 10,000 units in FY23, according to REHAB.
STOCK PERFORMANCE
Eastern Housing closed at Tk 90.10 on the Dhaka Stock Exchange on Wednesday, losing 1.10 per cent from the previous day.
The stock peaked at Tk 147.9 in October last year after declaring record profit for FY22.
Eastern Housing has dominated the market turnover chart several times on the DSE in the past few months when a majority of other stocks have been languishing at floor prices.
A very few companies were able to maintain a steady profit growth in the recent quarters. Eastern Housing is one of the securities that might have helped boost investor confidence, market insiders say.
Its business performance stands out when the war-induced economic turmoil ate up profits of most other listed companies: two major reasons were depreciation of the local currency against the dollar and high inflation.
Eastern Housing, founded by legendary entrepreneur Jahurul Islam, began its journey in 1964 with a residential area development project at Pallabi in the capital and now it is engaged in both land development and apartment business.
The company got listed in the DSE in 1994.
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