BT : Residential unit lifts CapitaLand Q1 earnings

Business Times - 17 Apr 2010

Residential unit lifts CapitaLand Q1 earnings

$800m worth units sold here in Q1 and sales are continuing

By EMILYN YAP

CONTRIBUTIONS from residential development projects helped lift CapitaLand's financial results for the first quarter ended March 31, 2010.

The property giant reaped a net profit of $115.4 million in Q1 - some 2.7 times the year-ago profit of $42.9 million. Its revenue climbed 41 per cent over the same period to $687.3 million.

CapitaLand Residential Singapore enjoyed a good quarter and became the biggest revenue contributor to the group. Its topline was $189.8 million, up 135 per cent from the previous year due to revenue recognition from The Seafront on Meyer and Latitude. Earnings before interest and tax (Ebit) rose 3.2 times to $63.2 million.

According to CapitaLand president and CEO Liew Mun Leong, the group sold about $800 million worth of residential units in Singapore in Q1, mainly from Urban Suites.

Sales are continuing into Q2. The group released more units at The Interlace over the Good Friday weekend, bringing the total number launched to 590. Some 75 per cent of these 590 units have been sold.

Average selling prices for units in the second phase ranged from $850 to $1,300 per square foot. 'This is an increase of 3-5 per cent compared to phase one units, as more of the units in phase two are located on higher floors, or have a more popular facing,' a CapitaLand spokesperson said.

CapitaLand Residential Singapore is holding on to more than 2,600 homes. It may launch the former Farrer Court site, Urban Resort Condominium and The Nassim this year.

More residential project launches are also on the way in the Chinese cities of Beijing, Shanghai, Kunshan and Hangzhou. Last year, CapitaLand bought Orient Overseas Developments Limited (OODL) and doubled its property portfolio in the mainland. 'We will continue to seek strategic opportunities such as the acquisition of OODL,' Mr Liew said.

CapitaLand Commercial also did well in Q1. Its revenue more than tripled to $120.7 million from $31.6 million, while its Ebit surged 73 per cent to $56.3 million.

CapitaLand Commercial said that office rents in Singapore have started to stabilise, and it is actively exploring new business opportunities here and abroad. In Vietnam, it aims to 'grow its portfolio from the current one per cent to 10 per cent of CapitaLand group's total assets over the next 3-5 years'.

Other divisions which saw a rise in both revenue and Ebit include CapitaLand China Holdings and CapitaMalls Asia.

Reflecting improved conditions in the hospitality industry, Ascott's revenue in Q1 rose 6 per cent year-on-year to $91.3 million. But Ebit fell 28 per cent to $8.9 million due mainly to share of lower Ascott Reit's fair value gains on financial derivatives and foreign exchange gain.

As at March 31, CapitaLand had a cash balance of $5.7 billion and a net debt-to-equity ratio of 0.27. 'We will continue to deploy funds to our businesses in China and Vietnam, and the serviced residence and integrated shopping mall businesses,' said CapitaLand chairman Richard Hu.

The counter closed at $4.10 yesterday, six cents down.

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