CapitaLand

CapitaLand: 1Q15 results were broadly in line, with net profit of $161.3m (-11.8% y/y) in absence of discontinued operations from 39.1% associate Australand, which was divested in 1Q14. Excluding revaluation and portfolio gains, operating net earnings would have come in flat at $155.3m (-0.3%).

Revenue jumped 49.4% to $915m on strong home sales in Singapore, China and Vietnam, as well as higher rentals from its shopping mall and serviced residence businesses.

Revenue from Singapore surged 75.4% to $343.8m. The group sold 69 residential units (1Q14: 34 units) in Singapore amounting to $197m (+126%) with higher contributions from Urban Resort Condominium, Sky Habitat, Sky Vue and Bedok Residences as well as the maiden recognition of Marine Blue. EBIT however declined 15.2% to $100.0m due to the dilution of CapitaCommercial Trust’s interest in Quill Capita Trust in Malaysia.

China revenue more than doubled to $203.7m, mainly due to the consolidation of CL Township from Mar ‘15, while CapitaLand China sold 1,306 residential units worth ~Rmb2.2b, versus 1,177 units worth Rmb1.3b the previous year. The sales were mainly from The Paragon and Lotus Mansion in Shanghai, Dolce Vita in Guangzhou, La Botanica in Xi’an and Riverfront in Hangzhou. EBIT fell 32.4% to $88.4m, mainly due to lower share of results from CCRE and Lai Fung, FX losses and higher admin expenses.

Collectively, Singapore and China accounted for 60% of the group’s total revenue.

CapitaMalls Asia enjoyed higher revenue of $181.5m (+7.4%), mainly due to the improved performance from Westgate and Bedok Mall as well as higher progressive profit recognition for Bedok Residences in the current period.

Meanwhile, revenue from serviced residences (Ascott) grew 9.7% to $167.2m, mainly due to higher fee income and contribution from properties acquired in 2014.

Other operating income fell 63.0% to $17.5m, due largely to a 38.1% decline in interest income and the absence of a forfeiture deposit of $26.6m from the previous year.

Contributions from associates and JVs dipped 10.6% to $125.6m, mainly due to the lower contribution from associates in China, namely Central China Real Estate (CCRE) and Lai Fung Holdings, as well as the d’Leedon project in Singapore.

Overall, management remains positive on its prospects and aims to harness its key strengths across its various businesses to create differentiated real estate projects and enhance project returns, with Singapore and China remaining as the group’s core markets. The group also aims to pursue growth opportunities in Vietnam, Indonesia and Malaysia.

Balance sheet remained fairly sound with net gearing at 58% and valuations are undemanding at 0.91x P/B.

Latest broker ratings:
Maybank-KE maintains Hold with TP $3.85
CIMB maintains Add with TP $4.08
Daiwa maintains Hold wit TP $3.90
Deutsche maintains Buy with TP $4.20
OCBC maintains Buy with TP $4.07
UBS maintains Buy with TP $4.12
UOB Kay Hian maintains Buy with TP $4.08