CapitaLand

CapitaLand: 3Q15 results came in line with estimates, as net profit spiked 48% y/y to $192m, boosted mainly by FX and fair value gains, as well as divestment of six Japanese properties.

Excluding those, operating profit grew 26%.

Revenue grew 17% to $1.08b, mainly from China residential development projects, as well as increased rental from shopping malls and serviced residence businesses across all markets, but partially offset by weaker development sales in Singapore and Vietnam.

Overall EBIT also rose 17% to $459.1m, contributed mainly from Singapore and China markets, which accounted for 41% and 34%, versus the 53% and 28% contribution in 3Q14, respectively.

Overall, the timing on the shift towards north Asia is commendable, given the continued dismal outlook on the Singapore private residential market caused by government cooling measures and concerns over interest rate hikes.
Meanwhile, bottom line was boosted by JV contributions on reversal of cost accruals upon finalisation for a project.

Balance sheet remains sound with net gearing at 51% (2Q15: 53%).

Going forward, the group expects its growth in China to continue, supported by the ongoing hand over of residential units, as well as additional launch-ready units from existing phases of various projects.

Separately, CapitaLand also announced that it has ceased negotiations with BlackRock on the potential acquisition of office building Asia Square Tower 1. This may be viewed positively given market concerns over increasing its office exposure at the peak of the cycle.

At the current price, CapitaLand is valued at 0.75x P/B.