Feb 12, 2010

CapitaLand's Q4 profits soar 1,000%

Listing of retail development unit CapitaMalls Asia boosts results

By Harsha Jethnani

A ONE-OFF gain as well as profits from residential developments in China, Singapore and Vietnam helped fuel a 1,036 per cent hike in profits at CapitaLand for the three months ended Dec 31.

The property giant saw its fourth-quarter profits swell to $886 million from $78 million a year earlier. The income hike was largely due to CapitaLand's retail development unit, CapitaMalls Asia, which contributed gains of $900 million as a result of its listing.

Revenue rose 18.4 per cent to $833 million, largely as a result of increased China contributions of $135.6 million.

The healthy final quarter ensured full-year profits broke through the $1 billion mark for the fourth year in a row. At $1.05 billion though, they were 16.4 per cent lower than in 2008, mainly due to revaluation and impairment losses.

Hefty losses mainly from the group's CapitaLand Commercial and Australand assets amounting to $816.8 million placed a significant drag on profits.

Revenue for the financial year rose 7.4 per cent to $2.96 billion, with overseas operations making up 67 per cent of the total. China and Australia emerged as the main contributors.

The group reported that much of last year was spent improving liquidity and strengthening its balance sheet.

CapitaLand Group chairman Richard Hu said: 'We ended the year with an improved net debt-to-equity ratio of 0.09, higher cash balance of $8.7 billion, and extended debt maturity of 4.4 years.'

Improved financing capability allowed CapitaLand to double its property portfolio in China with the acquisition of Orient Overseas Developments completed just two days ago. Assets in China now form 36 per cent of total assets, up from 28 per cent due to the US$2.2 billion (S$3.1 billion) deal.

Along with China, Singapore and Australia will remain key markets for the group - particularly in the residential segment. In Singapore, where there is a pipeline of 2,600 residential units, the group will be launching developments this year beginning with another launch of the Interlace units in Alexandra Road. This is scheduled to take place after Chinese New Year.

The other developments include The Nassim and Urban Resort located in Orchard and a development in Farrer Road.

Vietnam is going to be a key target market for CapitaLand. The group intends to grow its portfolio of assets there to 10 per cent of its total assets over the next three to five years.

As for business segments, the group intends to strengthen its position in the hospitality industry through the Ascott brand, particularly in China and Vietnam.

Private equity funds are also an area of interest for the group as it expects to launch a Malaysia residential fund by the first half of this year.

Full-year earnings per share of 26.2 cents were down on the 37 cents last time. Net asset value per share was $3.16 as of Dec 31, down from $3.78 previously. It proposes to pay a first and final dividend of 5.5 cents and a special dividend of five cents. Following its results announcement, CapitaLand's shares finished 11 cents higher at $3.86 per share.

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