CapitaLand posts 33% slide in third-quarter profit

SINGAPORE: CapitaLand Ltd, Southeast Asia’s biggest developer, said third-quarter profit fell 33% from a year earlier, when it booked gains from asset sales.

Net income for the three months ended Sept 30 declined to S$281.3 million (RM687.26 million) from S$419.4 million a year earlier, according to a Singapore stock exchange statement on Oct 27. Revenue rose 75% to S$1.05 billion as property markets of Singapore, China and Vietnam rebounded.

The global economic recovery helped CapitaLand post its smallest profit drop in a year and return to profit from its first loss in 5 1/2 years in the second quarter. Singapore’s economy grew 0.8% last quarter from a year earlier, the first gain in more than a year, while China’s gross domestic product grew at the fastest pace in a year during the period.

“The results were pretty decent and we think the recovery in volumes will be sustainable,” said Lau Wei Chong, an analyst at AmFraser Securities Pte in Singapore who recommends buying the stock. “If we look beyond these numbers and at the core earnings, it’s up quite substantially.”

Earnings per share fell to 6.5 cents from 11.9 cents a year earlier. Earnings last year included a one-time gain of S$432.7 million from the sale of stakes in properties in China and Singapore, and a goodwill gain from CapitaLand increasing its stake in Australian unit Australand Property Group.

CapitaLand fell 2.3% to S$4.33 at 10.39 am on Oct 27 in Singapore trading. Before that, it had risen 72% this year, versus a 54% gain in the Straits Times Index.

CapitaLand Residential Singapore’s earnings before interest and tax increased more than six-fold as the developer recognised income from its Seafront on Meyer and Latitude projects, according to the statement.

During the quarter, CapitaLand started sales at The Interlace, a Singapore site jointly developed with Hotel Properties Ltd., to capitalize on a rebound in real-estate demand. Another 165-unit development, located at the former Char Yong Gardens site, will be ready for sale in the fourth quarter, the company said on Oct 27.

Home prices climbed 15.8% in the third quarter, the first increase in more than a year and the biggest quarter-on-quarter gain since March 1981, the Urban Redevelopment Authority said last week.

“The group has performed significantly better this quarter than the previous two quarters,” chief executive officer Liew Mun Leong said in the statement. “We have had healthy sales volumes in Singapore, China and Vietnam.”

CapitaLand sold 1,611 homes in China in the first nine months of the year, more than double the units sold for the whole of 2008. Home prices rose 2.8% in September, the fastest pace in a year, as record lending and stimulus spending spurred a recovery in the world’s fastest-growing major economy, according to the National Bureau of Statistics.

Australand Property said on Oct 26 it has continued to see signs of “stabilisation and improved sentiment” over the last quarter. It remains “cautiously optimistic” the momentum will be maintained given the outlook for the nation’s economy, the developer said in its third-quarter update to the Singapore and Australia stock exchanges.

CapitaLand Retail also reported a six-fold gain in profit as revenue from its China and Malaysia malls increased. The opening of Singapore’s Ion Orchard mall in July also “contributed positively” to its business, according to the statement.

The developer said this month it plans to sell shares in its shopping mall business as it adds properties across Asia. It will be seeking shareholders’ approval this week for the listing of CapitaMalls Asia Ltd., CEO Liew said in the statement.

“If CapitaLand succeeds in listing the unit before the end of the year and gets above one time book value for its mall assets, we will see some significant revaluation gains that will pull up its full-year results,” AmFraser’s Lau said. – Bloomberg LP
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