Friday, August 3, 2012

CapitaLand Q2 earnings dip 3.3% to $386m

Business Times: Thu, Aug 02

CAPITALAND Limited, South-east Asia's largest developer by market value, recorded a 3.3 per cent year-on-year drop in second-quarter net profit as greater finance costs and lower fair-value gains offset improvements in home sales.

Net profit for the three months ended June 30, 2012, was $385.9 million, down from $399 million a year earlier, it said in a statement yesterday.

Revenue for the quarter rose 16.5 per cent to $862.5 million from $740.4 million, helped by higher sales in Singapore, China and Australia, as well as higher income from its shopping malls. Higher gross margin resulted in gross profit climbing 24.6 per cent to $340.8 million. But this was offset by factors such as finance costs, which rose 27 per cent year-on-year to $146.2 million.

The period also saw lower fair-value and other income (including portfolio) gains. The former fell 29.3 per cent to to $78.4 million and the latter 30.5 per cent to $109.3 million.

The group also registered other operating expenses of almost $32 million, up from just $864,000 a year ago. Factors contributing to this were foreign exchange and impairment losses.

A bright spot is a 10.8 per cent net rise to $322.5 million in share of results of associates and joint ventures. Excluding revaluations and impairments, Q2 net profit rose 4.8 per cent to $179.5 million from $171.3 million, CapitaLand said.

For the six months ended June, net profit rose 3.7 per cent to $519.1 million, while revenue grew 11.2 per cent to $1.5 billion.

CapitaLand's residential units in Singapore and China experienced improved demand in the April-June period compared with Q1, with units sold in Singapore and China jumping from 57 to 202 units, and 255 to 812 units, respectively.

Revenue from the group's Singapore development projects grew 11 per cent to $406.5 million, due to continued recognition for The Interlace, The Wharf Residence and Urban Resort Condominium. New phases from The Interlace and Sky Habitat will be released over the rest of 2012. In Q2, 27 units from The Interlace, 41 units from d'Leedon, and 125 units from Sky Habitat were sold.

Jason Leow, chief executive of CapitaLand China, said developer sale volumes had risen in China. "Overall market pricing has gone up (and) I think the second half will be the same. We're seeing a lot of pent-up demand, a lot of people are committing to buying property now after staying away for the past one, one-and-a-half years," he said.

The group is targeting to release new units from Residences 77 in Beijing, as well as subsequent phases from existing projects, such as The Loft in Chengdu and Dolce Vita in Guangzhou. The group's first value housing project, which is located in Wuhan, is also slated for launch towards Q4 2012.

CapitaLand, which has $13.6 billion worth of assets in China, said the selling prices of its Chinese projects went up by 4.9 per cent in the second quarter.

Noting that the group still has cash and cash equivalents of about $5.1 billion, Liew Mun Leong, president and chief executive of CapitaLand Group, said the group sees more investment opportunities in Malaysia. "Malaysia looks very interesting to us now ... and is somewhere we can commit some money. It's a matter of opportunities, whether Kuala Lumpur, Johor, or somewhere else."

CapitaMalls Asia (CMA) and Malaysia's Sime Darby Property are developing a shopping mall on a freehold site in Malaysia's Klang Valley. The mall, which is in the residential district of Taman Malawati, is CMA's first greenfield development in Malaysia, and CMA's sixth mall in Malaysia.

That said, the group intends to continue to focus on new investments in the two countries, which account for 72 per cent of its total assets of $33.4 billion.

Said Mr Liew: "Very broadly, we want to build up our residential land bank, particularly in Singapore ... Even in China, we're still looking to buy land, especially in value homes (where) we're still hungry to acquire land. The next one, I think, is shopping malls ... both greenfield as well as completed projects."

The group said it remained mindful of risks of more state intervention in real estate markets in Singapore and China, where regulators have acted in the past two years to curb rising home prices.

Home prices here are likely to stay stable over the next six months, CapitaLand executives said. They do not expect near-term government intervention because recent measures, such as the Additional Buyer's Stamp Duty, seem to be effectively curbing demand from foreign buyers.

The counter ended trading yesterday up 4 cents at $3.04.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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