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Growth Even In Adversity – CapitaLand’s Strong 1H12 Numbers
Corporate Digest | 01 August 2012
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By: Simeon Ang
Articles (125) Profile

It probably should not have come as a surprise that CapitaLand’s 1H12 results would boast stable growth, given that its subsidiaries and its REITs had all recorded pretty good figures this reporting season.

CapitaLand said this morning that its net profit grew 3.7 percent underpinned by revenue growth of 11.2 percent. Revenue growth was in turn driven by higher contributions from several projects both in Singapore and Australia, higher shopping mall revenue as well as fee-based income. Overall, CapitaLand said that its second quarter momentum had provided impetus for its 1H12 improved performance. Operating profit in 2Q12 grew more than 73.1 percent to hit $397.4 million, well above the operating profit of $229.5 million in 1Q12.

Given these glowing numbers, CapitaLand’s chairman, Ng Kee Choe opined that 1H12’s performance was a good achievement when faced with the uncertainties that is currently plaguing the global economic environment. In furtherance of that, Ng remarked that there is additional opportunity in adversity, especially in China where he feels CapitaLand is well-positioned.

To take advantage of its core competencies of financial strength, expertise and track record in China and other core markets, CapitaLand has sowed more seeds with $2.4 billion new investment commitments in the year-to-date. These commitments range from a $469.2 million investment in the Tiangongyuan site in Beijing to a $430 million investment in Twenty Anson in Singapore.

An artist's impression of CapitaLand's Tiangongyuan site in Beijing

Against this backdrop, CapitaLand has had other new developments during the past few months. Not too recently, it announcement a fresh capital recycling exercise with its subsidiary, Ascott Residence Trust which will reap profits for both entities. CapitaLand estimates that it will earn roughly $98.9 million from the exercise.

Aside from all these, CapitaLand continues to trade below its net asset value of $3.54 (as at 30 June 2012). At the point of writing, CapitaLand is trading at $3.04, near its intraday high of $3.05. Perhaps, investors have not yet acknowledged the investments that CapitaLand have made or maybe because the yields on the counter have not yet caught the eyes of those yield crazed ones. What do you think? Given its stable earnings growth and its continued savvy investments in the region as well as prudent capital management, why has the counter not seen interest from the investment public?

Artist's impression of Raffles City Hangzhou, opening in 2015

Simeon, an LSE graduate, is currently the editor of Aspire. He specialises on topics surrounding trading psychology, politics and macroeconomics.

Please click here for more information about this author.

CapitaLand  3.580 -- --   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More

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