CapitaLand profits slipped 7.4% to $295.57m in Q1

Lower contributions from Singapore and China dragged on earnings.

CapitaLand started 2019 on a dismal note after its profits dipped 7.4% YoY to $295.57m in Q1 from $319.09m in the same period in 2018, an announcement revealed. Revenue also fell 23.8% YoY from $1.38b to $1.05b.

The decline was attributed to lower operating profit after tax and minority interests (PATMI) and writeback of impairments, partially mitigated by gains realised from the assets recycling and revaluation of a property in China. Operating PATMI dropped 20.5% mainly due to the lower contributions from residential projects in Singapore and China.

Meanwhile, the revenue drop was blamed on lower contributions from CapitaLand’s residential projects in Singapore and China, partially mitigated by the higher handover of residential units from Vietnam, and higher rental revenue mainly from its portfolio of properties in US and Europe acquired in 2018.

According to its financial statement, CapitaLand also registered earnings before interest and tax (EBIT) of $802.1m, an increase of 2.3% from 2018’s $784.2m, due to higher portfolio and revaluation gains, as well as contributions from its US and Europe buys.

During Q1, CapitaLand continued to proactively reconstitute its portfolio by divesting over $485m of assets and investing over $760m. This includes the divestment of CapitaMall Wuhu, a bundled deal to divest CapitaMall Saihan in Hohhot, Inner Mongolia and acquire Yuquan Mall in Hohhot, the acquisition of a 70% stake in Pufa Tower in Shanghai, as well as the divestment of Ascott Raffles Place Singapore and acquisition of Citadines Connect Sydney Airport.

Also read: CapitaLand sells self-storage business StorHub for $185m

In Singapore, the group is scheduled to launch two residential developments at the current site of Pearl Bank Apartments and in Sengkang Central, offering 774 and 680 homes, respectively by Q3 2019. Following Jewel Changi Airport’s launch in April 2019 is the opening of Funan in June 2019, whereby CapitaLand will launch a new seamless shopping and lifestyle experience.

In Vietnam, 98% of the launched units have been sold as at 31 March 2019. The 2,371 units sold but not yet handed over are valued at approximately $732m, of which 31% of the sales value is expected to be recognised for the remainder of 2019. In Q1 2019, a total of 118 residential units were handed over to home buyers in Vietnam. 

Additionally, CapitaLand reportedly gained momentum in home sales in China despite tightening policy measures, with the group selling 91% or 1,218 units with a sales value of $500m (RMB2.6b). This represented a 22% and 53% increase in units and sales value, respectively, in Q1 2019. As at 31 March, the group had sold but not yet handed over approximately 7,800 units, with about 60% of the sales value expected to be recognised in 2019. CapitaLand said it expects to launch over 5,000 units for the remainder of the year.

According to Lee Chee Koon, president & group CEO of CapitaLand, the firm has also received overwhelming approval from independent shareholders at an Extraordinary General Meeting held on 12 April.

“This strategic combination will bring us complementary asset classes and geographies that will ensure sustainable growth. It will also strengthen our development pipeline and expand our REITs and funds,” he said in a statement, adding that YTD, CapitaLand has already launched two new funds and will ride on the momentum to further augment its fund management business.

Also read: CapitaLand to raise $1b for discretionary real estate debt fund