Orchard Parade (OPH) registered a 2Q09 net loss of $9.6m, dragged down mainly by its share of its associated company, Yeo Hiap Seng’s loss. Excluding this, OPH would have made a net profit of $3.7m,largely in-line with expectations.

The Group’s hotel revenue slumped by 42% yoy as a result of lower average room rates and occupancy rates. Operating margins are also lower for the same reasons. The management however believes that the environment will be more stable in the second half, and will continue to exercise prudence and cost management.

OPH’s losses this quarter are largely a consequence of YHS making an impairment loss on its quoted share investments (to the tune of $33.7m at YHS level). At the operational level, YHS has shown signs of margin-improvement, due to cost management particularly for the F&B division.

OPH has stepped up its marketing efforts for the 336-unit Floridian, and as a result, a further 34 units were sold in June at a median price of $1,261 psf. This brings the number of units sold to-date to 79. The progress of sales at Jardin is less encouraging, with only one unit sold in June at $1501 psf.

OPH’s hospitality business is likely to remain lackluster as long as the tourism industry remains soft in Singapore. YHS continues to be a drag on OPH’s group earnings. Maintain HOLD, at a target price of$0.93 pegged to a 30%-discount to its RNAV of $1.32.