CapitaLand Ltd’s Q2 profit falls 0.7% on-year to S$383.1m

CapitaLand Ltd’s second-quarter net profit fell 0.7 per cent to S$383.1 million from a year earlier due to lower portfolio gains.

Excluding portfolio gains, CapitaLand said its net profit would have risen 8.6 per cent to S$322.1 million.

Its revenue rose 37 per cent to S$1.18 billion in the second quarter.

CapitaLand, Southeast Asia’s biggest developer by market value, now wants to refocus its attention and pump more resources back to its two core markets – Singapore and China.

CapitaLand’s President and Group CEO Lim Ming Yan said: “We will continue to focus on our core markets of Singapore and China to develop homes, offices, shopping malls, serviced residences and mixed developments.”

Despite a slew of property cooling measures in both countries, CapitaLand said it remains upbeat on their growth prospects.

Singapore and China remain CapitaLand’s star performers, contributing to 63.5 per cent of the Group’s income in the first half of 2013.

In Singapore, CapitaLand sold 683 residential units amounting to about S$1.6 billion, up from 259 units worth S$467 million a year earlier.

While on mainland China, the developer moved 1,691 homes worth about S$640 million, higher than the 1,067 units worth S$400 million a year earlier.

CapitaLand is making a concerted effort to direct its resources to six cities, including Singapore.

It will also focus on five city clusters to seize new opportunities and reap economies of scale in China.

Not one to overlook its home market, CapitaLand will launch new residential projects in Singapore in the second half of 2013 in spite of the recent slew of cooling measures in the city-state.

About 75 per cent of CapitaLand’s group assets are in Singapore and China. Given the land scarcity in Singapore, analysts said it will be prudent for CapitaLand to devote more resources to China’s residential, retail and commercial markets.

Wilson Liew, investment analyst at Maybank Kim Eng, said: “They can be looking at more commercial investments in China. Demand for office in Beijing and Shanghai still remain relatively strong. That could come under the greater umbrella of the integrated developments which CapitaLand now appears to be targeting. That is a potential segment where there could be more growth.

He added: “Policy risks still remain on horizon, particularly in Singapore and even then, in terms of actual volumes, we are likely to see the month moderating going into the second half of this year.”

Mr Liew also commented on CapitaLand’s decision to hang on to its stake in Australand.

He said: “In terms of underlying profits, Australand is a fairly attractive investment but we don’t see synergies with the rest of CapitaLand. Given that the thinking behind CapitaLand is that China and Singapore continue to remain their key markets, we are fairly disappointed that they did not manage to sell Australand this time round.

So far, CapitaLand has invested about S$1.6 billion year to date and it hopes to achieve an eight to 12 per cent return on equity on a sustainable basis.

Source : CNA  – 25 Jul 2013

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