SINGAPORE (Apr 30): CapitaLand posted an 18.8% decline in 1Q18 earnings to $319.1 million from $392.8 million a year ago, on the absence of a $160.9 million gain from the sale of The Nassim in 1Q17.
Nonetheless, the group reported a 53.3% growth in 1Q18 revenue to $1.4 billion from $879.5 million a year ago.
This came on the account of account of higher contributions from development projects in Singapore and China; rental revenue from newly acquired and opened properties; as well as the consolidation of revenue from CapitaLand Mall Trust (CMT), CapitaLand Retail China Trust (CRCT) and RCS Trust (RCST).
Development projects which contributed to the revenue this quarter were Victoria Park Villas in Singapore and The Metropolis in China.
Collectively, the group’s two core markets of Singapore and China contributed to 81.2% of the group’s revenue. The two markets also remained key contributors to EBIT, accounting for 82.6% of total EBIT compared to 84% in 1Q17.
Over the quarter, CapitaLand Singapore sold 40 residential units with a total sales value of $150 million compared to 84 units valued at $504 million in the previous year.
Revenue for CapitaLand in China and Vietnam are recognised on completion basis upon handover of units to home buyers.
In CapitaLand China, 1,328 units were handed over to home buyers compared to 1,125 units in 1Q17, while revenue was higher mainly due to higher contribution from handover of units from subsidiary projects, better performance from retail malls in China and consolidation of CRCT from Aug 2017.
CapitaLand Vietnam handed over 259 residential units to home buyers compared to 116 units a year ago, although lower due to lower handover of units from subsidiary projects in Vietnam. The units handed over were mainly from joint venture projects, namely Vista Verde and Seasons Avenue.
Other operating income fell 81.7% to $38.4 million compared to $209.1 million a year ago, in the absence of a gain from the sale of units in The Nassim over 1Q17 as well as the absence of fair value gains from the group’s divestment of malls in China a year ago.
Other operating expenses more than doubled to $10.2 million from $4 million a year ago due to forex losses from the revaluation of RMB payables due to a depreciation of the SGD against RMB over the quarter.
Finance costs grew 42.9% to $148.5 million from $103.9 million a year ago, mainly due to the consolidation of the finance costs for the three trusts amounting to $37.1 million in 1Q18.
However, the group’s average cost of borrowings for the quarter was lower at 3.1% compared to 3.2% a year ago.
Administrative expenses grew 1.4% to $90.5 million from $89.2 million previously due to the consolidation of the three trusts from 3Q17.
Lim Ming Yan, Group CEO of CapitaLand, says the group is on track to achieve its annual $3 billion capital recycling target as it explores investment opportunities across asset classes.
“In 1Q18, we continued to optimise our portfolio by divesting 20 retail assets in China. This was followed by the proposed acquisition of Pearl Bank Apartments in Singapore and a site for our first integrated development in Vietnam. We also successfully set up our second commercial fund in the country, the US$130-million CapitaLand Vietnam Commercial Value-Added Fund, as part of growing our fee-based business,” says Lim.
Going forward, the group says its retail platform aims to increase the number of malls managed mainly through management contracts. It also continues to look for opportunities across various asset classes, especially in key gateway cities where it already has a presence.
Shares in CapitaLand closed 1 cent higher at $3.76 on Monday.
