CapitaLand's China malls hit by higher property tax

Strong home sales are its saving grace.

CapitaLand (CAPL)'s 9M16 net property income (NPI) in Singapore and China improved 2.2% and 5.2% respectively on a same-mall basis.

China malls however, were hit by a higher property tax in Beijing from 3Q16. Without this, MayBank KimEng notes that China's NPI growth would have been 6.0%.

Serviced apartment RevPAU was down 6% YoY in 3Q16. Singapore, Europe and the Gulf Region & India were key pressure points.

Moving forward, Capitaland is expected to continue registering strong home sales with China leading the way.

3Q16 sales growth of 28% YoY was spearheaded by a ramp-up in China as more homes were handed over.

"We expect the momentum to continue as unbilled sales in China remain high," it said.

CAPL guides that 9,800 units worth CNY14b have been sold. This is an increase from CNY13b of unbilled sales from 9,000 units in 3Q16. As 40% of these will be booked in 4Q16, sales visibility is SGD1.1b.

In 3Q16, CAPL sold 2,903 homes worth CNY5.8b for a 55% YoY jump in value from 3Q15's 2,422 homes worth CNY3.8b.

While management has tampered expectations by guiding for some impact from recently implemented cooling measures in China, the research house said that the onslaught will be mitigated by its focus on first-time buyers and upgraders.

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