Wednesday, October 28, 2009

CapitaLand Q3 profit drops 32.9% to $281.3m

Comparative quarter last year benefited from substantial divestment gains

PROPERTY giant CapitaLand has posted a 32.9 per cent year-on-year drop in net earnings to $281.3 million for the third quarter ended Sept 30, 2009.

Earnings before interest and tax (Ebit) slipped 34.9 per cent to $450.6 million. The fall in profit was due to the Q3 2008 bottom line being boosted by Ebit gains of $441.6 million from the divestments of One George Street in Singapore, Capital Tower Beijing and the Raffles City properties in China.

CapitaLand said its Q3 2009 earnings were largely driven by strong profit recognition from its residential projects as well as a $52.8 million gain from selling its remaining stake in Hong Kong's Link Reit.

The group achieved revenue of nearly $1.05 billion in Q3 2009, up 75.2 per cent from the same year-ago period.

The jump was due to higher revenue recognition for the group's development projects in Singapore (thanks to projects such as The Seafront on Meyer and Latitude), China and Vietnam, partly offset by an absence of acquisition fee income and rental revenue from commercial properties divested last year.

In Singapore, the group had sold 252 units at its Interlace condo as at end-September 2009 and said its 165-unit condo on the former Char Yong Gardens site will be launch-ready in Q4 2009.

In Vietnam, the group held a soft launch this month for 330 units in Mulberry Lane, a residential project in Hanoi. All the units have been booked and the group is targeting an official launch for the development, which will have a total of about 1,500 units, in early 2010.

For the first nine months of this year, CapitaLand posted net profit of $167.2 million, down 85.9 per cent from $1.18 billion in the same period last year. Ebit fell from $1.98 billion to $490.8 million.

The decrease was mainly attributed to lower divestment gains and an increase in impairment loss in the latest period. In addition, a net fair-value loss of $173.8 million from the revaluation of investment properties was posted in the first nine months of this year, compared with a net fair-value gain of $599 million in the same year-ago period.

In the first nine months of last year, the group had booked significant gains of $615.5 million - mainly from divesting its stake in Hitachi Tower, One George Street, Capital Tower Beijing and the Raffles City properties in China.

Group revenue rose 3.7 per cent in the first nine months to $2.12 billion.

Overseas Ebit contribution in 9M 2009 was $224.7 million or 45.8 per cent of group's total Ebit - against $1.2 billion or 62.4 per cent in the same year-ago period. The decrease in overseas Ebit was mainly due to lower contribution from China and Australia.

CapitaLand's Q3 2009 bottom line was an improvement from a $156.9 million net loss in Q2 this year and $42.9 million net profit in Q1.

The group trimmed net debt from $6.2 billion as at end-September 2008 to $5 billion at end-September 2009, resulting in a lowering of net debt-to-equity ratio from 0.51 to 0.35. Net asset value per share fell from $3.78 as at Dec 31, 2008 to $2.96 at Sept 30, 2009. CapitaLand had a 1-for-2 rights issue earlier this year which raised $1.84 billion.

CapitaLand will be holding an extraordinary general meeting on Friday to seek shareholders' approval for the proposed initial public offering (IPO) of its integrated shopping mall business under CapitaMalls Asia (CMA). A listing is slated by year-end. JPMorgan is sole financial adviser to the company.

The deal is expected to unlock value for CapitaLand shareholders.

UBS Investment Research estimates that the IPO could value CMA at around $8 billion to $10 billion, compared to book value of $5.3 billion. This would imply CapitaLand's revalued net asset value per share would increase to $4.91 to $5.36 - from $4.30 based on CMA's book value.

On the stock market yesterday, CapitaLand closed 13 cents lower at $4.30. The counter surged to $4.46 on Monday, reflecting a 21.5 per cent increase since CapitaLand first announced its plans for CMA earlier this month.

Source: Business Times, 28 Oct 2009

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