UPDATE: CapitaLand reports 2Q19 net profit fell 4 percent amid costs from Ascendas-Singbridge buy

Top of the CapitaLand building in Singapore’s central business district (CBD); taken September 2018.Top of the CapitaLand building in Singapore’s central business district (CBD); taken September 2018.

This article was originally published on Wednesday, 7 August 2019 at 7:25 A.M. SGT; it has since been updated with more details.

CapitaLand reported Wednesday its second quarter net profit fell 4.2 percent on-year to S$579.81 million, mainly on one-off costs related to the acquisition of Ascendas-Singbridge.

Excluding those costs, net profit would have risen 1.7 percent on-year, mainly on higher gains from asset recycling and revaluation gains on investment properties, offset by lower contributions from residential projects, CapitaLand said.

Revenue for the quarter ended 30 June declined 19.3 percent on-year to S$1.08 billion, mainly due to lower contributions from the residential trading business, the property developer said in a filing to SGX.

Investment property revenue rose 9.5 percent on-year to S$927.9 million.

Lee Chee Koon, group CEO, said the Ascendas-Singbridge acquisition would provide more opportunities for growth and unlocking value.

Singapore and China accounted for 62.8 percent of revenue for the quarter, down from 75.8 percent in the year-ago quarter, the filing said.

Administrative expenses surged 52.3 percent on-year to S$121.20 million, the filing said.

In the Singapore, Malaysia and Indonesia (SMI), Vietnam and Internatonal business unit, revenue fell 0.7 percent on-year to S$490.9 percent, with earnings before interest and tax (EBIT) coming in at S$527.1 million, down 27.9 percent on-year for the quarter, mainly on lower contributions from residential projects in Singapore, partly offset by the U.S. and Germany properties and higher handover of residential units in Vietnam, CapitaLand said.

“The lower revenue from Singapore was mainly due to lower residential sales as projects are progressively fully sold and absence of rental revenue from properties divested in 2018, namely, Sembawang Shopping Centre and Twenty Anson,” CapitaLand said.

China EBIT rose 16.2 percent on-year to S$635.7 million for the quarter, despite revenue falling 54.5 percent on-year to S$258.4 million, the filing said.

Revenue fell on lower contributions from handing over units as some projects — The Metropolis in Kunshan, New Horizon in Shanghai and Century Park West in Chengdu — had significant completions in the year-ago period, CapitaLand said. The company said it handed over 2,271 units in China in the quarter, compared with 2,599 units in the year-ago quarter.

But EBIT in China rose on higher portfolio gains and fair value gains from the revaluation of investment properties, with S$125.1 million recognized from the divestment of two commercial properties and three shopping malls, the filing said.

For the first half, CapitaLand reported net profit fell 5.3 percent on-year to S$875.37 million on revenue of S$2.13 billion, down 21.6 percent on-year.

In its outlook, CapitaLand was cautious, pointing to IMF forecasts for global economic growth to fall to its lowest since the 2008 Global Financial Crisis.

“Against a backdrop of cautious global economic outlook, the enlarged CapitaLand Group, with added asset classes and a new core market in India, will be better positioned to weather economic uncertainties and seize growth opportunities across its core business segments,” the property developer said.

“Through the group’s newly-acquired business parks, logistics and industrial assets, CapitaLand is expected to benefit from new economy trends such as the growth in ecommerce, urbanisation and knowledge economies,” it added.

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