S’pore property developers’ results likely mixed

Singapore’s listed property developers are likely to post mixed results for the October-to-December quarter but the main focus of attention is likely to be how measures designed to cool the domestic property market will affect their outlook, with tightening in China also a factor.

Although the impact of the cooling moves introduced last month has yet to be fully felt, the Government has already signalled that it would deploy further measures if needed.

Analysts say the situation is difficult to call because strong economic fundamentals, low interest rates and healthy demand will likely give some support to the market.

“For 2011, we expect transaction volume (in the residential sector) to slow down to 8,000 to 10,000 units and prices to decline 5 to 15 per cent,” UOB Kay Hian said in a research note.

CapitaLand – Results due on Feb 22

Market Expectations: Five analysts polled by Dow Jones Newswires expect CapitaLand to post fourth-quarter net profit of S$231.3 million, down 73.9 per cent from S$885.7 million in the year-ago period, when net profit surged mostly on one-time gains from the listing of CapitaMalls Asia. Revenue is tipped to have risen 6 per cent to S$883 million.

Key Issues: Quarterly profit for South-east Asia’s largest property developer by market capitalisation was likely underpinned by stable earnings from its fund management business and recent residential launches in Singapore and China, although CapitaLand’s exposure to the China market, where about 36 per cent of its assets are located, may weigh as Beijing’s tightening moves took effect.

CapitaLand remains lowly geared with a potential S$5.1 billion to S$8.8 billion investment capacity, according to JPMorgan estimates.

“The healthy net debt/equity ratio of 0.19 times and a strong balance sheet will allow the group to capitalise on any opportunities that might arise on the back of policy tightening measures across Asia,” DBS Vickers said.

Risks include a reversal in the current buoyant liquidity and loose monetary conditions and a failure to deploy its investment capacity into accretive investments.

City Developments – Results due on Feb 24

Market Expectations: Five analysts polled by Dow Jones Newswires expect City Developments to post fourth-quarter net profit of S$217.4 million, up 23 per cent from S$176.7 million a year ago. Revenue is tipped to have fallen 25.3 per cent to S$689 million.

Key Issues: Traditionally focused on the Singapore residential market, City Developments’ earnings may be supported by resilient home sales and continued price growth in the last quarter, although the latter slowed following cooling measures in August.

Nonetheless, analysts tip the developer to underperform the market this year following last month’s cooling measures and rising supply.

“With the policy overhang likely to persist, we see few reasons to turn positive on residential developers,” CIMB said, keeping CityDev at Underweight.

Source : Today – 18 Feb 2011

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