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CapitaLand Profit Climbs 85% on Higher Sales and Divestments

CapitaLand Profit Climbs 85% on Higher Sales and Divestments
Pedestrians walk outside the Ion Orchard mall, jointly owned by CapitaLand Ltd. and Sun Hung Kai Properties Ltd., on Orchard Road in Singapore. Photographer: Munshi Ahmed/Bloomberg

CapitaLand Ltd., Southeast Asia’s biggest developer, said third-quarter profit rose 85 percent as it sold more homes and booked gains from the sale of serviced-apartment buildings in China.

Net income climbed to S$148.5 million ($122 million) in the three months ended Sept. 30, from S$80.2 million a year earlier, it said in a statement to the Singapore stock exchange today. That’s lower than the S$191 million mean estimate of three analysts compiled by Bloomberg. Sales climbed 13 percent to S$686.9 million, the Singapore-based developer said.

“CapitaLand had a strong quarter,” Lau Wei Chong and Sarah Wong, Singapore-based analysts at AmFraser Securities Pte, said in a note today, maintaining their buy rating on the stock. “Strong earnings were buoyed by divestment gains.”

The developer posted portfolio gains of $79.8 million from the sale of its service residences Ascott Guangzhou and Ascott Raffles Place to Ascott Residence Trust, and the sale of its entire 20.75 percent stake in United Malayan Land Bhd. Sales from Singapore projects rose 7 percent to S$220.1 million, mainly from the Interlace and Urban Resort Condominium, the company said. Revenue from China accounted for $67.9 million, a 67 percent increase over the previous year, it said.

“China residential sales remained buoyant,” the analysts said, adding that they expect the developer to deliver about 1,300 units in China in the fourth quarter, which could boost profit.

CapitaLand Shares

The shares were unchanged at S$3.27 at the close of trading in Singapore, after falling as much as 0.6 percent and rising as much as 0.9 percent. The stock has gained 49 percent this year, compared with the 15 percent advance in Singapore’s benchmark Straits Times Index.

“Although global economic conditions have been volatile and uncertain, we continue to explore and seize opportunities,” Liew Mun Leong, president and chief executive officer of the group, said in the statement. “Having invested substantially over the past few years, we expect these investments to bear fruits in the coming years.”

CapitaLand earlier this month named Chief Operating Officer Lim Ming Yan as president and CEO when Liew retires next year from the company he helped create almost 12 years ago.

Under Liew, CapitaLand expanded beyond the limited Singapore market with a population of 5.3 million. China made up 38 percent of the company’s S$34.1 billion of assets as at Sept. 30, exceeding Singapore’s 32 percent, according to data from the company. Australia contributed 17 percent.

Singapore Homes

CapitaLand’s Singapore home sales climbed to 329 units valued at S$633 million in the nine months to Sept. 30, it said. Residential sales in China gained 67 percent to about 2,000 units in the nine month period.

The developer has about 2,500 homes under development and expects to sell as many as 1,000 units a year over the next two to three years, it said in its annual report. Its three core markets of Singapore, China and Australia accounted for 88 percent of the group’s revenue in the nine months ended Sept. 30.

CapitaLand committed a total of S$11 billion for new investments last year, an 83 percent increase from the S$6 billion worth of investments made in 2010.

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