CapitaLand makes S$2b bet on China despite weak SG sales

The company’s 3Q11 numbers were down mainly due to lower recognition of sales from development projects.

In a statement, DMG Research said the lower figures were accentuated by the change of accounting for sales through deferred payment which likely raised 3Q10 numbers. The change resulted in weaker residential sales in both Singapore and China.

3Q11 revenue of S$608.6m was -58.0%YoY with Singapore projects making significant contributions to 3Q10 numbers with sales through deferred payment. Together with lower portfolio gains as well as well as higher finance costs, net profit was lower at S$80.2m, -82.6%YoY.

YTD, revenue and net profit would have been –12.7%YoY to S$1,960.5m and -22.7%YoY to S$580.7m respectively excluding effects of the accounting change.

Residential sales of 338 units, down 35% YoY and 1,339 units, down 30%YoY respectively for Singapore and China on lower sales volume, reflects impact from negative headwinds in both markets.

The research firm, however, remains bullish about CapitaLand given its S$2b commitment to invest in China in 3Q11.

DMG Research added that the company’s action of buying back shares since September supports the view “that deep value is embedded in CapitaLand’s share price.”

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