CapitaLand Fourth Quarter Profit Falls 45% on Lower Gains

CapitaLand Ltd., Southeast Asia’s biggest developer, said fourth-quarter profit fell 45 percent as it booked lower gains from the divestment of assets and posted higher impairment charges for some investments.

Net income slid to S$262.7 million ($212 million) in the quarter ended Dec. 31, from S$476.6 million a year earlier, it said in a statement to the Singapore exchange today. Sales rose 4.9 percent to S$1.11 billion, the Singapore-based developer said. For the full year, profit declined 12 percent to S$930.3 million, higher than the S$881.5 million mean estimate of 12 analyst estimates compiled by Bloomberg.

CapitaLand is reorganizing into four main units to help focus on its key markets and has said it may exit some projects in the U.K., India and the Middle East. It also faces more government measures in Singapore to curb gains in home prices. The developer named Lim Ming Yan as president and chief executive officer, replacing Liew Mun Leong, who retired last year from the company he helped create about 12 years ago.

“Our financial strength, expertise and track record will enable us to weather market volatility,” Lim, who took on the new role this year, said in the statement. “With a more streamlined organization, we will be better able to leverage our prudent capital structure and development capabilities across the different property segments when pursuing new investment opportunities.”

Lower Gains

Portfolio gains fell to S$27.2 million in the fourth quarter from the divestment of Citadines Ashley Hong Kong and as its stake in two property trusts were diluted, down from S$83.7 million a year earlier, it said. The company took an impairment charge of S$35 million from investments in Bahrain, Singapore, Japan and India, up from S$26.3 a year earlier.

CapitaLand will also focus on China and Singapore, its two biggest markets by assets. The group will be realigned into four divisions: CapitaLand Singapore, CapitaLand China, CapitaMalls Asia and The Ascott Ltd., it said last month.

Lim, 49, was the chief operating officer at CapitaLand and ran the developer’s operations in China for nine years until 2009. Lim returned to Singapore to helm the Ascott group, CapitaLand’s serviced residence business.

China made up 39 percent of its S$34.5 billion assets as of December, followed by 33 percent in Singapore, it said. Australia is the third-largest market with 16 percent.

China Sales

“The China sales numbers will be key and we would be looking for Lim Ming Yan’s strategy for the group, their acquisition strategy going forward after the change in leadership,” said Vijay Natarajan, an analyst at UOB-Kay Hian Pte in Singapore. “Sales have been good for its d’Leedon and Interlace projects in Singapore,” referring to two of the company’s biggest residential developments in the city.

The shares lost 2.7 percent to S$3.90 at the close in Singapore trading, the biggest drop since Jan. 14. That pared the gain in the past year to 27 percent, compared with the 8.7 percent advance in Singapore’s benchmark Straits Times Index.

CapitaLand’s revenue from Singapore projects climbed 10 percent to S$854.3 million, boosted by sales at the Interlace, Urban Resort Condominium and Sky Habitat, the company said.

The developer sold 681 residential units in Singapore valued at S$1.3 billion in the year, down from 844 homes or S$1.35 billion of sales a year earlier, it said. Since the start of 2013, the developer sold 395 homes, Lim said at a press conference today. Residential sales in China more than doubled to 3,161 units in the same period.

New Curbs

Singapore introduced new measures last month that included an increase in the stamp duty for homebuyers by between 5 percentage points and 7 percentage points, with permanent residents paying taxes when they buy their first home. Singaporeans will also have the levy starting with their second purchase.

CapitaLand said transaction volume and prices may “moderate,” with the high-end segment more likely to be affected by the curbs.

The developers’ two core markets of Singapore and China accounted for 76.9 percent of the group’s profit before interest and tax in the year. The company made new investment commitments of S$4.1 billion last year, with Singapore and China accounting for 71 percent, it said.