Capitaland

Capitaland: 4Q13 results were largely in line, with net profit at $142.9m (-45.6%) taking FY13 net profit to $849.8m (-8.7%). Excluding once-off divestment loss, core net profit for the quarter was at $263.7m (+0.4%). Revenue inched down slightly to $1.1b (-2.3%) due to the deconsolidation of AustraLand and lower contributions from CapitaLand Singapore (-37%). The decrease was partially mitigated by higher revenue from CapitaLand China which more than doubled, and CMA (+39.7%), as well as higher sales from development projects in Vietnam. Gross margins fell to 20.1% versus 32% in the corresponding period due to higher provision for foreseeable losses ($99.1m) in respect of the group’s projects in Australia, China and Vietnam, and relatively higher project costs for units sold in the quarter. Other operating income jumped 46.5% to $199.5m, aided largely by a 173% surge in fair value gains to $138m, from the group’s investment properties in Singapore, China, Japan and Malaysia. This was however offset by a 639.4% spike in other operating expenses to $234.4m, arising from the losses of sale from Australand and Technopark@Chai Chee, as well as higher impairment and FX losses. Associate and JV contributions grew a combined 10.4% to $344.2m driven by higher contributions from development projects in China and Singapore, namely Imperial Bay in Hangzhoi, Beaufort in Beijing, The Loft in Chengdu and d’Leedon in Singapore. Operationally for FY13, sales of residential units in Singapore nearly doubled with a total of 1,260 units sold amounting to a sales value of $2.44b, while China saw 3,009 residential units with a value of $1.12b sold during the same period. Going forward, CapitaLand remains positive on the long-term demand of its key markets in Singapore and China, and will continue to build its pipeline of residential and commercial developments by investing in well-located sites in the two countries. CapitaLand’s fundamentals remain sound with net gearing at 34.4%, while valuations are undemanding at just 0.78x P/B. Latest broker ratings as follows: OCBC maintains Buy and places its $3.77 fair value under review