SINGAPORE: CapitaLand Ltd, Southeast Asia’s biggest developer, said second-quarter profit rose 14% as it posted higher earnings from its key businesses and recorded gains from investment properties.

Net income increased to S$438.7 million (RM1.12 billion) in the three months ended June 30 from S$383.3 million a year earlier, the Singapore-based developer said in a stock exchange statement yesterday. Excluding the gain from the sale of its stake in Australand Property Group and contributions from the Australian developer last year, earnings would have risen 32%, it said. Revenue fell 13% to S$875.3 million.

CapitaLand is realigning its business to focus on more profitable opportunities in Singapore and China after buying the rest of its mall unit to consolidate some businesses and boost returns. Singapore and China, the company’s two main markets, accounted for 79% of the group’s earnings before interest and taxes in the June quarter, it said.

The stable income-generating portfolio of investment properties, which make up 75% of total assets, and residential assets, which make up the remaining 25%, post the CapitaMalls transaction “will help to mitigate residential market headwinds faced in China and Singapore,” Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore, said.

CapitaLand’s China home sales declined 46% to 2,231 units in the first six months to June, the developer said. Home sales in Singapore fell 71% to 195 units, it said.

The company booked a gain of S$427.3 million before interest and taxes from the revaluation of its investment properties, compared with S$407.9 million a year earlier.

The company is on track to achieve its target on return on equity of 8% to 12% in three to five years, Pandey said.

Home sales in the city-state by volume fell 68% in June from May as developers marketed fewer projects, according to figures from the Urban Redevelopment Authority. The government began introducing housing-market curbs in 2009, with some of the strictest measures implemented in 2013.

CapitaMalls Asia, the mall unit that it took private, will focus on opening new shopping malls in China and India in the coming months, the developer said.

“With a simplified organisational structure, CapitaLand is strategically positioned to leverage its strength in development, as well as management of integrated developments, shopping malls and serviced residences to capture the growth in Asia,” Lim Ming Yan, president of CapitaLand, said in the statement. — Bloomberg


This article first appeared in The Edge Financial Daily, on August 6, 2014.

 

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