Wednesday, 14 November 2018

Review of CapitaLand 3Q18 Results

CapitaLand has just released its 3Q18 results this morning.

All in all it is a good set of numbers as expected.

PATMI increased by 13.6% to $362.2 M.

Due to higher operating PATMI and assets recycling.

Operating PATMI increased by 13.3% to $233.7 M.

Due to contributions from newly acquired and opened investment properties.

EBIT increased 0.2% to $796.3 M.

Due to recurring income from investment properties and contributions from development projects, fair value uplift and portfolio gains from divestments.

Topline for the quarter fell 16.9% to $1.26 B.

Due to lower contributions from development projects in China and Singapore, partially mitigated by higher rental revenue from newly acquired and opened properties as well as consolidation of revenue from three entities.

$4.0 B of assets are divested YTD and recycled into $6.1 B of new investments including higher yielding assets that are immediately incoming producing.

Gearing stands at 0.51x (2018 YTD)

Notable Points

1) RMB6.36 B and more than S$71.2 M of sales will be recognised in 4Q18 from China and Vietnam markets.

2) CapitaLand / GIC JV's acquisition of Shanghai's tallest twin towers along the north bund. This iconic landmark will be CapitaLand's 3rd Raffles City in Shanghai and 10th globally.

Property construction is expected to be completed by next June.

3) There is 44% drop in portfolio gains comparing YoY. I need to spend some time to further understand this. Nonetheless is still a gain not a loss.


No matter how I look this is a decent set of results from CapitaLand. However it does not seems to provide the catalyst for the uplift of its share price. Same as with previous cases.

In fact CapitaLand was among the top institutional selling last week.

Perhaps the big boys deemed this to be not good enough. Or perhaps there is a deliberate attempt to push down the share price.

My feel is that CapitaLand is always on the radar of the institutional players and therefore will always be subject to the effects of the big boys trade.

With a slew of developments in the pipeline (e.g. new acquisitions, malls management, coliving, coworking, dormitories, etc) the outlook for CapitaLand is exciting to look forward to.

At this point of writing, CapitaLand is trading at an attractive level. Will continue to add.

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