http://www.businesstimes.com.sg/prem...s-449-20130222

Published February 22, 2013

CapitaLand net profit in Q4 slips 44.9%

Fall due to lower valuation and portfolio gains, and higher impairment

By Mindy Tan


SHARES of CapitaLand beat a retreat yesterday, slipping 2.7 per cent to $3.90, after the group said its fourth-quarter net profit dropped 44.9 per cent to $262.7 million, even as revenue rose 4.9 per cent to $1.1 billion.

The year-on-year profit fall was due to factors such as lower valuation and portfolio gains and higher impairment. Excluding these three items, operating profit after tax and minority interests for the three months ended Dec 31, 2012, was $110.8 million, 30 per cent lower than Q4 2011's $158.5 million.

For FY2012, net profit fell 12 per cent to $930.3 million. Excluding revaluations and impairments, net profit was $568.7 million, marginally lower than $573.5 million a year ago.

Earnings per share were 6.2 cents for Q4 and 21.9 cents for FY2012.

Revenue for the year was $3.3 billion, up 9.3 per cent, owing largely to higher contributions from the group's development projects, shopping malls and fee-based businesses.

On the Singapore front, 681 residential units were sold in 2012 (versus 844 units the previous year), translating into total sales value of $1.3 billion, almost similar to the previous year.

Lim Ming Yan, president and group chief executive of CapitaLand, revealed that 395 units had been sold during the first two months of 2013, a strong start compared with the previous year.

While acknowledging that the cooling measures imposed on the property market may result in transaction volume and prices moderating, Mr Lim noted the Population White Paper had highlighted that the population was growing, and that "strong economic fundamentals and a growing population will underpin continued demand for new homes in Singapore".

While the group aims to achieve 8-10 per cent of Singapore's market share, this will not be pursued at all cost, he said.

CapitaLand is targeting to launch some 2,800 units this year, from Interlace, d'Leedon and Sky Habitat, as well as two new projects, Marine Point and Bishan St 14 (next to Sky Habitat).

Across the Causeway, CapitaLand is planning a premier waterfront residential community comprising high-rise and landed homes, together with a central waterfront hub that includes F&B outlets/restaurants, serviced residences, offices and recreational facilities.

The 3.1 million square foot plot in Danga Bay in the Iskandar region in Johor will be acquired and developed by CapitaLand (51 per cent), Iskandar Waterfront Sdn Bhd (40 per cent) and Temasek Holdings (9 per cent).

In China, strong sales momentum since Q2 resulted in more than a doubling in units sold and sales value year-on-year to 3,161 units and about 7 billion yuan (S$1.4 billion) respectively, compared with FY2011's 1,466 units sold with value totalling 2.9 billion yuan (S$600 million). Of this, more than 2,000 units were sold in the second half of 2012, said CapitaLand.

The group plans to hand over 3,000 units in FY2013, with 4,000 units worth about 6 billion yuan launch-ready.

Barclays Research said: "We expect these to transform into better earnings as the units are handed over in the next few years."

This year, three new residential projects - Vermont Hills in Beijing, Summit Residences in Ningbo and The Lakeside in Wuhan - are expected to be launch-ready.

Raffles City Chengdu expects to launch its luxury apartments in H1 2013, followed by the opening of the serviced residences in the later part of the year.

"The group will deploy additional capital to build on its leadership position in China," said CapitaLand.

Providing an update on the group's strategic review, Mr Lim said the company's regional investments in Australand, Storhub and Surbana were still under strategic review.

"While we classify them as non-core, we are in no hurry to sell them," he said, adding that the group intends to maintain its presence in Vietnam, working on existing residential projects to optimise returns.

Said group deputy CEO Olivier Lim: "The way we look at these businesses is to ask the question - is it core or non-core. If it's core, how do you integrate it, how do you expand it as part of the group? If it's non-core, can it be built into a substantial core business and, if so, are we willing to put the money against it ... Over the next three to six months I think we should see some action."

An ordinary dividend of 7 cents per share was proposed, versus 6 cents per share previously.