CapitaLand posts 28% rise in Q3 profit on fair value, portfolio gains

The Ascott Limited, CapitaLand’s wholly owned serviced residence business unit, is investing S$170.3 million in the serviced residence component of the Funan integrated development. PHOTO: ASCOTT
Asia Square Tower 2. PHOTO: CAPITALAND

SINGAPORE - Fair value and portfolio gains from its Singapore and China properties, together with a 60 per cent stake in CapitaLand Vietnam Commercial Fund I helped boost real estate giant CapitaLand's earnings for the third financial quarter by 28 per cent.

Net profit came in at S$316.95 million for the three months to Sept 30, 2017, from S$247.5 million a year ago.

The fair value gains of investment properties in Q3 came from Golden Shoe Car Park and the serviced residence component of Funan integrated development in Singapore, as well as the divestment of two serviced residence properties in China.

Earnings per share crept up to 0.28 Singapore cents.

However, operating profit for Q3 2017 decreased by 18.8 per cent to S$204.5 million, due to lower handover of residential projects in China and the divestment of certain commercial assets in Singapore, the company said.

Revenue for Q3 2017 increased 9.7 per cent to S$1.51 billion on account of higher contribution from development projects in Singapore, higher rental revenue from newly acquired and opened shopping malls and serviced residences, as well as the consolidation of revenue from CapitaLand Mall Trust, CapitaLand Retail China Trust and RCS Trust.

In a research note, OCBC Investment Research analyst Eli Lee said that this quarter's results were broadly within expectations.

The group announced residential sales remained stable in Singapore with 108 units sold in the third quarter, bringing the total number of residential units sold in the year to September to 293 with a sales value of S$1.15 billion. This includes units at Cairnhill Nine, which was fully sold as at July 2017, and Victoria Park Villas, which was 86 per cent sold as at Sept 30, 2017.

"Our active portfolio reconstitution has boosted our results as well as our AUM (assets under management) which stands at S$85 billion as at end of Q3 2017," said CapitaLand president and group CEO Lim Ming Yan.

He added that the group will continue to maintain its presence in core markets of Singapore and China, while scaling up business in places like Vietnam through residential, serviced residence and commercial projects.

Looking ahead, the quarterly rise of 1.7 per cent in Grade A office rents supports the group's view that market rates have bottomed out. CapitaLand also expects improved sentiment to sustain the residential property market, underpinned by an increase in home prices and buying volume.

Its shares were trading down S$0.03 or 0.8 per cent at S$3.69 as of 10.17am on Wednesday.

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