Market ignores CapitaLand, SIA losses

Market ignores CapitaLand, SIA losses
Dec 31, 2009 - PropertyGuru.com.sg

Even though ‘big hitters’ such as CapitaLand and Singapore Airlines posted quarterly losses and warned of difficult days in the future, the Strait Times Index (STI) romped to 2,636 points high for over ten months.

Yesterday, the second biggest airline in the world by market capitalisation posted a loss of $307 million for the quarterly period from April to June. The incurred loss was mainly due to the combination of the global economic decline, the fuel hedging losses and the outbreak of Influenza A.

It was the company’s second time to post a quarterly loss. From April to June 2003, it dropped into red to the amount of $312 million at the height of the Sars pandemic.

However, today, unlike the fiscal year 2003 and 2004, the company was threatened that the full year could be in the red. If that happens, this year would be its first loss-making year ever since it was first established in 1972.

On the other hand, the biggest property developer in South-east Asia, CapitaLand, also posted its first quarter loss as of 2003, noting write-downs on investments.

CapitaLand pictured a dark outlook for the full year once its net loss of $156.9 million for the period of April to June increases.

According to Chairman Richard Hu, “Although some stability has been restored in the financial markets, the outlook for 2009 remains uncertain”.

CapitaLand noted that excluding impairments and revaluations, the company earned a net profit of $124 million for the quarter.

Three big banks are going to report their quarterly results next week. They will surely be closely watched to determine the levels of free-based income trends and non-performing loans.

Others like the SembCorp will supply denotations of the latest trend in world infrastructure expenditures. As the market tries to hold its hopes on the recovery, major companies like CapitaLand and SIA seems to doubt the forward indicators.

In the case of SIA, though signs of small sequential improvements can be seen, premium seat sales remain under pressure. Premium seats also account for 40 percent of the income of the airline.

For this year, the International Air Transport Association (IATA) anticipates the market to post losses of about US$9 billion.

Carriers from the Asia-Pacific experienced a 14.5 percent yearly decline in passenger demand in June, twice the world passenger traffic decline of 7.2 percent.

For the property division, repressed demand has released a new craze of buying by upgraders. Due to this, the prices of new residential property have increased by 5 to 7 percent every month.

Most developers will surely enjoy the spoils of unloading inventory. However, like what CIMB said, strong household balance sheets and loosening of the credit market have aided to carry dealings.

According to the research house, the following leg of the growth in the demand has to come from key improvements in the economy. It can still be seen whether the increasing demand in 2010 to 2011 will be enough to get the supply balanced to strike the market.

However, the liquidity that flows in the Singapore market has promoted the STI by a walloping 81 percent as of March.