CapitaLand posts 3.3% lower net profit in Q2

Property heavyweight CapitaLand saw its net profit slipped 3.3 per cent on-year in the second quarter to S$385.9 million on the back of higher finance costs and lower fair-value gains.

This, even though CapitaLand sold more homes both in Singapore and China during the quarter. Revenue grew 16.5 per cent on-quarter to S$862.4m.

The company said it sold 41 units of D’leedon, 125 units of Sky Habitat and 27 more units at its Interlace project in the second quarter.

These were some of the units that helped boost revenue by some 10.6 per cent for its Singapore development projects segment.

Still, CapitaLand says it has some 743 unsold new homes from all its developments as at June 30. The company will launch more units of Sky Habitat for sale, as 55 of the launched units remained unsold.

CapitaLand added that it also has another 1,491 units which have not been launched yet as at June 30, giving it a strong development pipeline of approximately 2,200 homes.

Even so, the firm plans to release more units from existing developments to improve take-up rates in Singapore.

CapitaLand CEO Liew Mun Leong said: “All the major projects like Sky Habitat and D’Leedon have further phases to be launched. Marine Point and Nassim are all in the line up. The suburbs will be what we will concentrate on.”

China remains a bright spot for CapitaLand despite the property cooling measures in the country. The number of new homes sold in China tripled from the same period last year, growing by 218 per cent on-quarter.

Mr Liew said: “In the first quarter, their (China) policy controlled investors rather than homebuyers. In the second quarter, they have relaxed some of these rules, basically encouraging people to buy their homes. Therefore the second quarter has grown very well.”

CapitaLand home prices in China rose 4.9 per cent in the second quarter from the previous quarter, boosting the group’s sales value four-fold by 311 per cent on-quarter.

Mr Liew said: “In fact, in my view, second half will be better, because in the two countries that we are active in — China and Singapore — we can see that in our business at least, the second half of this year in China and Singapore will be just as good if not better.”

Singapore and China will continue to be CapitaLand’s key markets for new investments, as underlying fundamentals of the housing sector are sound due to new home formation, rising urbanisation, and growing wealth creation.

Out the S$2.4 billion of new investments, 67 per cent are committed in Singapore and China.

Bryan Go, Phillip Securities Research analyst, said: “The results are overall in line with expectations, and we are still positive. The underlying REITs and investment vehicles like CapitaMalls are still performing.”

CapitaLand says it’s still in a period of investing, especially in malls. Looking ahead, at least 16 malls will be opened in China and three in Singapore.

The group reports that its first half net profit rose 3.7 per cent from the same period last year to S$519.1 million.

Source : Channel NewsAsia – 1 Aug 2012

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