CapitaLand 4Q profit falls as one-time gains drop

Net income fell to $522.1 million, or 11.5 cents, in the three months ended Dec. 31 from $885.7 million, or 19.2 cents, a year earlier, the company said today in a statement to the Singapore stock exchange. Revenue climbed 37% to $1.1 billion. For the full year, profit increased 21% to $1.27 billion, exceeding the $834 million average estimate of 23 analysts surveyed by Bloomberg.

CapitaLand’s quarterly rental income declined after it sold four shopping malls and 28 serviced residence properties in the year, the company said in the statement. The developer booked a one-time gain of $223.4 million from its divestments in the fourth quarter, compared with $929.9 million a year earlier, when it spun off its retail property unit, CapitaMalls Asia.

“The results were exaggerated by revaluation and divestment gains,” said Donald Chua, a Singapore-based analyst at CIMB-GK Pte who has a “neutral” rating on CapitaLand shares. “Stripping those out, the core earnings weren’t fantastic as home sales in China and Singapore weren’t as fast as expected as sentiment has been weak. There’ll be some more pressure as the governments recently introduced rate hikes and other curbs.”

Singapore last month implemented new steps including limits on loans and raised sales taxes, while China suspended third mortgages and increased interest rates for the first time in three years.

The stock fell 1.5% to $3.31 as of 9 a.m. in Singapore, set for its lowest close since July 13, 2009.

‘Positive Outlook’

CapitaLand said it’s keeping a “positive outlook” on China and Singapore, its two biggest markets, even as governments in the region introduce fresh measures to damp the threat of asset bubbles caused by capital inflows and low interest rates. The company said today it plans to market 1,700 homes in Singapore and about 4,000 in China this year.

While the Singapore government’s new round of property cooling measures have “subdued the market and caused overall sentiment to dip,” CapitaLand said it expects earnings from Singapore home sales to “remain healthy.”

Private home prices in Singapore, CapitaLand’s biggest market by pretax earnings in the fourth quarter, climbed to a record in the three months as the nation’s fastest economic growth since independence in 1965 overwhelmed government measures to cool the market. The government said Feb. 14 it may take further steps to damp the property market if needed following last month’s curbs.

Singapore’s three-month interbank rate fell to 0.4375% yesterday, the lowest since Bloomberg began compiling the data in 1999.

In China, CapitaLand said it will look at acquiring new sites as it sees continued demand in the country even as the Chinese government moves to curb property speculation.

CapitaLand has proposed a final dividend of 6 cents, unchanged from a year earlier.