Capitaland Investment

[Musicwhiz]

Business Times - 27 Apr 2011

CapitaLand posts $101.5m Q1 profit

Earnings 3.4 times restated Q12010 net profit of $29.8m; revenue jumps 39%

By KALPANA RASHIWALA

PROPERTY giant CapitaLand reported first-quarter 2011 net profit of $101.5 million, which is 3.4 times the restated Q1 2010 net profit of $29.8 million. The latter was previously reported at $115.4 million.

The restated Q1 2010 net profit figure takes into account the retrospective adjustments relating to Financial Reporting Standard INT FRS 115 - Agreements for the Construction of Real Estate - which took effect on Jan 1, 2011.

The group said it will continue to adopt the percentage of completion method of revenue and profit recognition for units sold in development projects under the progressive payment scheme in Singapore.

For projects sold under the deferred payment scheme in Singapore (such as The Orchard Residences) as well as all overseas development projects, revenue and profits will be recognised when the units are handed over to buyers.

CapitaLand booked Q1 2011 revenue of $611.5 million, up 39 per cent from the restated figure of nearly $440 million in the same quarter last year. This was due chiefly to higher contribution from the group's development projects in Singapore, China and Australia. These include residential projects such as The Interlace and The Wharf Residence in Singapore; Beau Residences and The Riviera in China; as well as commercial, industrial and residential projects in Australia.

At earnings before interest and tax (Ebit) level, the group made $283.5 million in Q1 2011, up 46 per cent over Q1 2010. The improvement was largely fuelled by higher profits from development projects, higher portfolio gains and lower forex losses.

In Q1 2011, the group booked a net portfolio gain of $16.4 million mainly from realisation of available-for-sale reserves in respect of LFIE Holding Limited following CapitaLand China Holdings increasing its stake in LFIE from 6.95 per cent to 44.98 per cent. LFIE Holdings' shareholders include Fung Properties China, an investment arm of the privately held Fung Holdings Limited.

The latter belongs to the families of the controlling shareholders of Li & Fung Group. CapitaLand's investment is not related to the publicly listed companies of the Li & Fung Group. LFIE is developing 7,800 homes on a 1.1-million-sq-m waterfront site in Guangzhou.

CapitaLand Group president and CEO Liew Mun Leong said the group's core markets of Singapore, China and Australia accounted for 96 per cent of group Ebit in Q1 2011.

Ascott, the group's serviced residences arm, saw revenue fall 10.1 per cent year on year to $82.1 million in Q1 2011. Ebit fell 59.8 per cent to $3.6 million. The declines were on the back of lower share of contribution from the 28 properties divested to Ascott Reit in Q4 2010.

The group said it remains on track to launch 1,700 homes in Singapore this year from projects including The Interlace, d'Leedon and a new condo at Bedok Town Centre.

The group's net debt-to-equity ratio dipped from 0.28 at March 31, 2010 to 0.2 at March 31, 2011.

Cash and cash equivalents fell 12.6 per cent from $7.2 billion at Dec 31, 2010 to $6.3 billion at March 31, 2011. The latter figure includes cash balances of $3.2 billion held at CapitaLand Limited and CapitaLand Treasury.

'The strong balance sheet puts the group in good stead to seek investments in fast-growing Asian countries, in particular China, for sustainable growth in 2011,' CapitaLand said.

Earlier this month, CapitaLand acquired a 40 per cent stake in Surbana Corporation to complement and accelerate the growth of its value housing business. On INT FRS 115, CapitaLand said the implementation of the standard will result in the accounting recognition of the group's overseas development projects in a manner that may not reflect the sales and construction progress of those projects.

'In particular, the new standard will result in income recognition that is lumpy and back-ended, thus creating more volatility in profit recognition even though the underlying projects' cash flows have not changed. It also does not reflect the gradual reduction of risk and the increase in economic value from these underlying projects as they are built and sold over their development phases.'

Earnings per share rose from 0.7 cent in Q1 2010 to 2.4 cents in Q1 2011. Net asset value per share dipped from $3.29 as at Dec 31, 2010 to $3.27 as at March 31, 2011.

On the stock market yesterday, CapitaLand closed one cent lower at $3.40.

(Not Vested)

[Thriftville]

Hey MW, would you consider to add Capitaland in your portfolio, when the price gets more attractive?

[Musicwhiz]

Hey MW, would you consider to add Capitaland in your portfolio, when the price gets more attractive?

Never really considered Capitaland. I am lousy with property companies as their earnings/cash flows are rather lumpy. Capitaland is also hogging the limelight too often, with frequent fund-raisings and spin-offs (CMA, CCT, CMT). This would mean their shares are most likely overvalued or fully valued. I also do not like their very high debt levels.

[Musicwhiz]

Jun 3, 2011
CapitaLand's share dip linked to China
Poor showing due to concerns over firm's greater exposure, vulnerability to policy changes
By Cheryl Lim

A GREATER exposure to China's property market and shorter investment horizons could be to blame for CapitaLand's dismal share performance of late, said analysts.

Shares of the regional property developer hit a two-year low of $3.07 yesterday, down four cents. The shares are also still trading lower than the $3.76 price at the beginning of the year. The company's current market capitalisation is $13.1 billion.

'CapitaLand is quite heavily invested in the Singapore and Chinese property sectors, both of which are quite overwrought with policy concerns,' said Kim Eng analyst Wilson Liew, who covers several property stocks.

'The last week has also seen Chinese property counters taking quite a beating and CapitaLand's shares may be moving in line with that.'

As of March this year, CapitaLand's assets in China, including Hong Kong and Macau, accounted for roughly one-third of its total assets.

Although other property developers may also be active in the Chinese residential market, their exposure is smaller, said market watchers.

For example, a recent report by Kim Eng estimated Keppel Land's assets in China to be about 20 per cent of its total asset portfolio.

Analysts said investors might see CapitaLand's investment in the mainland as more substantial and, as a result, more vulnerable to the risk of policy changes as compared to other developers.

'While investors have no worries about the company's financial stability, whether they want to stay invested in them during a period of uncertainty is another thing,' said Mr Liew, adding that investors might also put their money elsewhere if they find something more stable in another sector.

But Mr Lin Jin Shu, an investment analyst with Sias Research, said this situation could work to CapitaLand's advantage.

'China has been tightening its monetary policy but the company may be poised to ride the wave back when China eventually decides to reverse those changes,' he said.

CapitaLand's affiliate CapitaMalls Asia (CMA) has had a similarly lacklustre performance this year.

At the closing bell yesterday, CMA's share price was $1.58, down five cents and well down on the $1.91 price at the beginning of this year.

Kim Eng's Mr Liew noted: 'Malls usually take three years to construct and maybe another three years for rents to stabilise. Most investors nowadays tend to have a shorter investment horizon so they may not be so keen to wait so long to see returns.'

Many analysts have issued 'buy' calls on both CapitaLand and CMA. Mr Lin suggested that investors may have overreacted.

He said: 'Both counters have been making earnings. CapitaLand's first-quarter results saw its net profits triple... We have yet to see negative developments from them.'

cherlim@sph.com.sg

[momoeagle]

I have entered Capitaland today to add on to what I have.
There's not much reason for me, apart from me thinking it's fair value is around $3.50, which again has not much reasons too :x

[Musicwhiz]

I have entered Capitaland today to add on to what I have.
There's not much reason for me, apart from me thinking it's fair value is around $3.50, which again has not much reasons too :x

Hi Momo,

You are basing your fair value assumption on PER or RNAV? Or perhaps some other metric?

[momoeagle]

Hi MW,

I meant I have no base. Just a gut feel.

[corydorus]

Hi MW,

I meant I have no base. Just a gut feel.

I like that ! But make sure you also have the gut feel to sell later.

[Nick]

Hi MW,

I meant I have no base. Just a gut feel.

Classic buy first, think later !

[momoeagle]

Hi MW,

I meant I have no base. Just a gut feel.

I like that ! But make sure you also have the gut feel to sell later.

Hahaha

This one is trade. I have 2 lots at average <$2 after having sold 1 at $3.50 long ago... This is just adding on

---

Hi MW,

I meant I have no base. Just a gut feel.

Classic buy first, think later !

Shhhh