reporter2
06-08-14, 11:07
http://www.businesstimes.com.sg/premium/companies/others/capitaland-q2-sales-slide-20140806
Published August 06, 2014
CapitaLand Q2 sales slide
But earnings up on improved operating profits and revaluation gains
By Lynette Khoo
[email protected] @LynetteKhooBT
THE impact of slower development sales hit home for CapitaLand this year, with its second quarter ended June 30 results registering a drop in revenue. Having substantially sold down residential units in its launched projects, it still has some 500 launched but unsold units in Singapore and some 2,000 such units in China.
Also in its pipeline are close to 392 more residential units in Singapore and over 7,500 units in China that are ready for launch this year.
But group chief executive Lim Ming Yan noted that the rebalancing of the group portfolio since one and a half years ago has yielded results - 75 per cent of total group assets now resides in investment properties and 25 per cent in residential properties.
"This will help to mitigate the residential market headwinds faced in Singapore and China," Mr Lim said at the group's Q2 results briefing.
This also puts the group in a stronger position to look for opportunities in Singapore and China, he said, adding that the group is now on track to achieve a return on equity (ROE) target of 8-12 per cent in the next three to five years.
CapitaLand's net profit grew 14.5 per cent to S$438.7 million in Q2 on the back of stronger operating profits, higher revaluation gains from investment properties and a write-back of impairments. This came in largely in-line with analysts' estimates.
Its revenue for the quarter, however, fell 13.2 per cent to S$875.3 million as lower development sales in Singapore and China, offset the impact of higher contributions from its shopping mall, serviced residence businesses and development projects in Vietnam.
Group Ebit (earnings before interest and tax) edged up 4 per cent from a year ago to S$799.7 million, which included a net fair value gain of S$427.3 million (up from S$407.9 million a year ago). Singapore and China markets accounted for 78.6 per cent of total Ebit from continuing operations.
So far, over 85 per cent of its launched units in China and 89 per cent in Singapore have been sold. But gross margins have waned for Singapore residential projects in the first half to about 14 per cent, down from 17 per cent for the whole of 2013, according to CapitaLand Singapore CEO Wen Khai Meng.
Asked if CapitaLand would offer further discounts for unsold stock of launched projects as it had done for its Bishan project Sky Habitat, Mr Wen said the group still has pricing flexibility given "some buffer between current selling prices and costs".
According to CapitaLand Residential Singapore CEO Wong Heang Fine, the 124-unit Marine Blue condo project in Marine Parade is already launch-ready and could be "priced competitively". The 268-
unit Cairnhill in Orchard will be launch-ready in the next quarter.
As for the residential projects in China, gross margin improved to 25 per cent in the first half, from 22 per cent for the whole of last year, said CapitaLand China CEO Jason Leow.
Standard Chartered analysts said in a note that there is potential upside surprise from faster China residential sales as property cooling measures are relaxed in China but kept their "in-line" rating for CapitaLand.
Meanwhile, CapitaLand's Danga Bay project, a S$3.2 billion joint venture project to build a waterfront township, has been delayed pending regulatory approval on the masterplan, Mr Wen revealed.
The first residential phase comprising a 950-unit high-rise condo was earlier slated for launch this year.
Mr Wen said the group hopes to resolve this regulatory issue within a month. And the capital that it has put in - about 10 per cent of its share in the JV - has been placed in an escrow account and could possibly be retrieved if the project does not proceed.
The group yesterday also announced the appointment of Ng Kok Siong as chief corporate development officer with effect from Sept 1. Mr Ng will relinquish his role as CapitaMalls Asia's chief financial officer and will report directly to the group CEO.
Published August 06, 2014
CapitaLand Q2 sales slide
But earnings up on improved operating profits and revaluation gains
By Lynette Khoo
[email protected] @LynetteKhooBT
THE impact of slower development sales hit home for CapitaLand this year, with its second quarter ended June 30 results registering a drop in revenue. Having substantially sold down residential units in its launched projects, it still has some 500 launched but unsold units in Singapore and some 2,000 such units in China.
Also in its pipeline are close to 392 more residential units in Singapore and over 7,500 units in China that are ready for launch this year.
But group chief executive Lim Ming Yan noted that the rebalancing of the group portfolio since one and a half years ago has yielded results - 75 per cent of total group assets now resides in investment properties and 25 per cent in residential properties.
"This will help to mitigate the residential market headwinds faced in Singapore and China," Mr Lim said at the group's Q2 results briefing.
This also puts the group in a stronger position to look for opportunities in Singapore and China, he said, adding that the group is now on track to achieve a return on equity (ROE) target of 8-12 per cent in the next three to five years.
CapitaLand's net profit grew 14.5 per cent to S$438.7 million in Q2 on the back of stronger operating profits, higher revaluation gains from investment properties and a write-back of impairments. This came in largely in-line with analysts' estimates.
Its revenue for the quarter, however, fell 13.2 per cent to S$875.3 million as lower development sales in Singapore and China, offset the impact of higher contributions from its shopping mall, serviced residence businesses and development projects in Vietnam.
Group Ebit (earnings before interest and tax) edged up 4 per cent from a year ago to S$799.7 million, which included a net fair value gain of S$427.3 million (up from S$407.9 million a year ago). Singapore and China markets accounted for 78.6 per cent of total Ebit from continuing operations.
So far, over 85 per cent of its launched units in China and 89 per cent in Singapore have been sold. But gross margins have waned for Singapore residential projects in the first half to about 14 per cent, down from 17 per cent for the whole of 2013, according to CapitaLand Singapore CEO Wen Khai Meng.
Asked if CapitaLand would offer further discounts for unsold stock of launched projects as it had done for its Bishan project Sky Habitat, Mr Wen said the group still has pricing flexibility given "some buffer between current selling prices and costs".
According to CapitaLand Residential Singapore CEO Wong Heang Fine, the 124-unit Marine Blue condo project in Marine Parade is already launch-ready and could be "priced competitively". The 268-
unit Cairnhill in Orchard will be launch-ready in the next quarter.
As for the residential projects in China, gross margin improved to 25 per cent in the first half, from 22 per cent for the whole of last year, said CapitaLand China CEO Jason Leow.
Standard Chartered analysts said in a note that there is potential upside surprise from faster China residential sales as property cooling measures are relaxed in China but kept their "in-line" rating for CapitaLand.
Meanwhile, CapitaLand's Danga Bay project, a S$3.2 billion joint venture project to build a waterfront township, has been delayed pending regulatory approval on the masterplan, Mr Wen revealed.
The first residential phase comprising a 950-unit high-rise condo was earlier slated for launch this year.
Mr Wen said the group hopes to resolve this regulatory issue within a month. And the capital that it has put in - about 10 per cent of its share in the JV - has been placed in an escrow account and could possibly be retrieved if the project does not proceed.
The group yesterday also announced the appointment of Ng Kok Siong as chief corporate development officer with effect from Sept 1. Mr Ng will relinquish his role as CapitaMalls Asia's chief financial officer and will report directly to the group CEO.