Eastern Housing's profit dropped slightly to Tk 194 million in the October-December quarter of FY24, as apartment sales fell sharply amid rising costs of building materials.
The lone listed realtor's apartment sales dropped 62 per cent year-on-year to Tk 31 million in the second quarter of FY24, while land sales rose 5 per cent to Tk 627 million.
As a result, the overall revenue slid more than 3 per cent year-on-year to Tk 658 million in the quarter, according to an un-audited financial statement published on Wednesday.
Company secretary Selim Ahmed said high cost of building materials was a deterrent to "aggressive investments" in new apartment projects.
"We are very much cautious about taking on new apartment projects."
The developer's half-yearly profit, however, climbed nearly 4 per cent year-on-year to Tk 303 million for the period through December last year.
The operating cash flow, however, turned negative in the reporting period since cash collection against plot sales declined significantly because of registration difficulties.
The registration tax rate has doubled in some areas.
Eastern Housing's shifting focus from building apartments to land development has proved to be a right way to go about business when the prices of construction raw materials have shot up.
Property developers' earnings have plunged as their larger segment of consumers, the middle-class, are running short of savings.
The overall construction cost went up 20 per cent year-on-year in FY23, leading to an escalation in apartment prices.
In consequence of that, the demand for apartments fell in Dhaka, Chattogram, and other big cities across the country, according to the Real Estate and Housing Association of Bangladesh (REHAB).
Eastern Housing's annual profit, however, grew 25 per cent year-on-year to Tk 688 million in FY23 despite a 7 per cent drop in revenue to Tk 3.08 billion.
Its annual apartment sales plummeted 40 per cent in FY23. The company steered its focus to land sales in the year to make up for the loss of business.
Overall, high prices of land and apartments coupled with a significant jump in finance income from short-term deposits contributed to the surge in annual profit.
The company's short-term investments amount to Tk 4.54 billion while it has Tk 350 million deposited in the Bangladesh Bank, according to its financial statements.
Meanwhile, the company has continued to purchase land at Jahurul Islam City in Aftabnagar for its second and third phase. It has a target to acquire 300 bighas of land for the two extended projects.
On the other hand, construction works of seven apartment projects are going on. Among the projects, construction of one luxurious project at Gulshan in the capital is almost complete, while work on another project at Dhanmondi and a mega project of 261 apartments at Uttarkhan, Chalaban is going to begin.
Stock Performance
The stock price of Eastern Housing rose 1.76 per cent further to close at Tk 98.2 on Wednesday on the Dhaka Stock Exchange, despite a lower profit in Q2, FY24 compared to the same quarter a year ago.
It peaked at Tk 104 per share in September last year and then came down to Tk 78 at the end of November. Since then the stock has continued to rise amid modest volatility.
Eastern Housing shares had never been stuck on the floor.
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