CapitaLand Profit Falls 1.7% as Gains From Property Sales Drop

CapitaLand Ltd., Southeast Asia’s biggest developer, said first-quarter profit declined 1.7 percent after it earned less from the sale of properties and revenue weakened.

Net income decreased to S$182.8 million ($145 million) in the three months ended March 31 from S$186 million a year earlier, the Singapore-based developer said in a stock exchange statement today. A prior year comparison included at one-time portfolio gain of S$58.7 million, it said. Revenue fell 3.4 percent to S$612.6 million.

CapitaLand is realigning its business to focus on more profitable opportunities in Singapore and China by offering to buy the rest of its mall unit to consolidate some businesses and boost returns. Its two core markets of Singapore and China accounted for 83.6 percent of the group’s profit before interest and tax in the March quarter, it said.

“We look forward to further harnessing the key strengths of our various businesses in residential, shopping malls, offices, serviced residences and integrated developments, to create differentiated real estate projects and enhance overall project returns,” Group Chief Executive Officer Lim Ming Yan said in the statement. He added that Singapore and China will remain as the company’s “core markets.”

The developer sold 1,177 home units in China and 34 in Singapore in the quarter, according to the company.

Home Prices

Singapore’s first-quarter home prices declined for a second consecutive as tighter mortgages cooled demand in Asia’s second-most expensive housing market. An index tracking private residential prices fell 1.3 percent in the three months ended March 31, a government statement today showed.

CapitaLand earlier this month offered to buy CapitaMalls Asia -- whose Singapore malls include ION Orchard and Plaza Singapura along the city’s famed Orchard Road shopping strip -- for S$3.06 billion. The latest deal will help CapitaLand increase emphasis on mixed-use developments, those that include residential, commercial and retail projects, the company said. The developer sold shares in the unit in 2009, raising S$2.8 billion.

The developer also announced plans to sell its entire 59 percent stake in Australand Property Group to repay debt.

“The profit was almost in-line with our estimate,” said Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore. “CapitaLand is streamlining its business after its plan to merge its mall unit and divest its stake in Australand. It is trying to stick to its target of achieving a return on equity of between 8 percent and 12 percent.”

The shares fell 0.9 percent to S$3.24, while the benchmark Straits Times Index slipped 0.5 percent. The company reported earnings after the close of trading.

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