Saturday, November 12, 2011

CDL posts 32.4% drop in Q3 profit

Business Times: Fri, Nov 11
(SINGAPORE) City Developments Ltd (CDL), which posted a 32.4 per cent year-on-year drop in third-quarter net profit to $132.1 million yesterday, will preview the first phase of a new 99-year-leasehold condo in Pasir Ris this weekend at an average price of $870 per square foot for early birds.


CDL executive chairman Kwek Leng Beng reiterated yesterday that some slowdown in home sales in Singapore is expected. He also acknowledged that Singapore office rentals had increased too quickly and a pause is expected.


For Q3 ended Sept 30, 2011, the group's revenue rose 8.1 per cent to $805.8 million from a year ago.


For the nine months ended Sept 30, group net profit rose 17 per cent to $635.3 million on a 5.2 per cent improvement in revenue to $2.56 billion. The group expects to remain profitable for the current year.


It said that the drop in Q3 net earnings - despite increased contribution from the property development segment - was due to lower contribution from rental properties following the disposal of non-core investment properties in 2010 and early 2011, including The Corporate Office and The Corporate Building (both at Robinson Road), strata units in GB Building, and its stake in Chinatown Point. There was also absence of gains from dilution of investment in CDL Hospitality Trusts following a private placement in July 2010.


In addition, higher recognition of net unrealised losses arising from fair value readjustments of the group's trading securities also affected its latest Q3 result.


Commenting on the Singapore residential sector, Mr Kwek said: 'On the back of more cautious sentiments, volume of sales will not be as swift as before and prices are likely to hover around current levels in the foreseeable future.'


Properties on better-located development sites, such as those near existing or future MRT/LRT stations, if priced reasonably, will continue to sell, he added.


He was confident that the government would tweak its policies when needed to ensure the health of the economy and the real estate market.


Meanwhile, the group was well-placed to seize any opportunities that may arise, he said.


As at end-Sept, the group had cash reserves of $2.6 billion, up 38.9 per cent from Dec 31, 2010, due to strong operating cash flow.


'Without factoring in any fair value gains on investment properties, the net gearing ratio of the group as at Sept 30, 2011, remains low at 21 per cent, with strong interest cover at 22.1 times . . .,' Mr Kwek added.


For Q3 2011, the group booked profits from Hundred Trees, 368 Thomson, One Shenton, The Arte, Cube 8 and Volari. Profits were also booked from joint-venture projects such as Livia, NV Residences, The Gale and Tree House.


However, no profit has been booked from H20 Residences, Buckley Classique, Hedges Park and Blossom Residences as construction has either yet to begin or is in the initial stages.


For this weekend's preview of the first phase of The Palette, an 892-unit condo in Pasir Ris, absolute unit prices will range from $561,000 for a one-bedroom unit of 495 square feet to $1.8 million for a 2,217 sq ft penthouse. CDL is developing the project with Hong Realty and Hong Leong Holdings.


The group plans to launch next year an executive condo in Choa Chu Kang. Construction of Nouvel 18 at Anderson Road - in which CDL has a half stake - is in progress and the group will review and assess the market before deciding on its launch. Other projects in the planning process include the redevelopment of the Lucky Tower site at Grange Road.


CDL subsidiary Millennium & Copthorne Hotels' revenue per available room - on a like-for-like basis - increased 3.9 per cent year on year in October.


On the Singapore office market, Mr Kwek said: 'Now with the European financial crisis, US anaemic recovery and the increased uncertainty in the global economy, companies may put on hold expansion plans or are cutting jobs. Moving forward, the group believes that this is only temporary. Once economic confidence is restored, demand for office space will be healthy as Singapore is a hub for this region and industries like wealth management are already ramping up their operations and expertise in Singapore.'


Q3 earnings per share fell to 14.5 cents from 21.5 cents a year ago. Net asset value per share rose to $7.31 as at Sept 30 from $6.89 as at Dec 31 last year.


In the stock market yesterday, CDL shares ended 38 cents lower at $10.25.




Source: Business Times © Singapore Press Holdings Ltd

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Martin Koh/ Sherry Tang
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