CapitaLand's China assets to rev up earnings

Operating profits rose 70% YoY.

Capitaland’s 1Q13 PATMI of S$188.2m is in line with market expectations. DBS notes that This represents a 41% jump y-o-y, driven by portfolio gains, lower effective tax rate and higher associate contributions while revenue inched up 3.2% to S$662m. Operating PATMI came in at S$133m, +70% y-o-y.

DBS said that Singapore residential activities, CMA and Ascott provide boost. Performance was boosted by higher sales of 544 units in Singapore (largely D’Leedon) and recognition of contributions from Interlace in Singapore and The Metropolis in China. Higher profits at
CMA and Ascott also lifted the bottomline.

Moving forward, DBS expects residential earnings to pick up pace, thanks to China assets.

Here's more from DBS:

Looking ahead, we expect better contributions in the coming quarters, led by China on recognition of c3000 units this year. With 955 units of new sales in China from Metropolis, Pinnacle, Paragon and The Loft locked in during Q1 and another 3500 units that are launch ready, earnings visibility of this SBU has improved. Meanwhile in Singapore, launch of Marine Point enbloc site and Bishan St 14 are planned for 2H13.

Rental contributions to grow from AEI and newbuilds. Contributions from non-residential segments are expected to grow, led by CMA. With 6 new malls to be completed this year and
earnings momentum from completed properties accelerating, we anticipate better performance from this business unit.

Meanwhile the completed RC assets are also benefiting from AEI works and the new RC Chengdu and Ningbo are 90% preleased. The group also has significant capacity for new investments with a gearing of 0.44x.

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