CapitaLand Ltd., Southeast Asia’s biggest developer, said second-quarter profit rose 14 percent as it posted higher earnings from its key businesses and recorded gains from investment properties.
Net income increased to S$438.7 million ($352 million) in the three months ended June 30 from S$383.3 million a year earlier, the Singapore-based developer said in a stock exchange statement today. Excluding the gain from the sale of its stake in Australand Property Group and contributions from the Australian developer last year, earnings would have risen 32 percent, it said. Revenue fell 13 percent to S$875.3 million.
CapitaLand is realigning its business to focus on more profitable opportunities in Singapore and China after buying the rest of its mall unit to consolidate some businesses and boost returns. Singapore and China, the company’s two main markets, accounted for 79 percent of the group’s earnings before interest and tax in the June quarter, it said.
The stable income generating portfolio of investment properties, which make up 75 percent of total assets, and residential assets, which make up the remaining 25 percent, post the CapitaMalls transaction “will help to mitigate residential market headwinds faced in China and Singapore,” Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore, said.
Residential values in Singapore slid for a third quarter in the three months to June to post the longest losing streak in five years after the government introduced loan measures in June 2013, widening a campaign that began in 2009 to curb speculation. The property curbs are working though it’s too early to relax the measures, Monetary Authority of Singapore Managing Director Ravi Menon said on July 24.
CapitaLand’s China home sales declined 46 percent to 2,231 units in the first six months to June, the developer said. Home sales in Singapore fell 71 percent to 195 units, it said.
The company booked a gain of S$427.3 million before interest and taxes from the revaluation of its investment properties, compared with S$407.9 million a year earlier.
The company is on track to achieve its target on return on equity of 8 percent to 12 percent in three to five years, Pandey said.
Home sales in the city-state by volume fell 68 percent in June from May as developers marketed fewer projects, according to figures from the Urban Redevelopment Authority. The government began introducing the housing-market curbs in 2009, with some of the strictest measures implemented in 2013, including a cap on debt at 60 percent of a borrower’s income.
CapitaLand’s shares rose 1.2 percent to S$3.44 as of 2:29 p.m. in Singapore trading, while the benchmark Straits Times Index added 0.1 percent.
CapitaMalls Asia, the mall unit that it took private, will focus on opening new shopping malls in China and India in the coming months, the developer said.
“With a simplified organizational structure, CapitaLand is strategically positioned to leverage its strength in development, as well as management of integrated developments, shopping malls and serviced residences to capture the growth in Asia,” Lim Ming Yan, president of CapitaLand, said in the statement.