CapitaLand's Q1 profit up 35% mainly on fair-value gain

BUOYED by the fair-value gain from the divestment of a property in China, Singapore developer CapitaLand clocked in a 35.4 per cent increase in net profit after tax and minority interest (Patmi) to S$218.3 million for the first quarter ended March 31, 2016.

The China property, Somerset ZhongGuanCun Beijing, was divested for a cash consideration of S$125 million and the transaction is expected to be completed in the second quarter.

Revenue dipped 2.3 per cent to S$894.2 million mainly due to the absence of a fair-value gain of S$59.6 million arising from the change in the use of Ascott Heng Shan Shanghai in Q1 2015, and lower contributions from the group's development projects in Singapore and Vietnam.

The group said this decrease was partially mitigated by higher residential sales revenue in China, as well as higher rental revenues from CapitaGreen and the serviced residence business.

CapitaLand's operating Patmi for the first quarter was 1.6 per cent lower year on year at S$152.8 million. Excluding gains from the change in the use of properties in both Q1 2015 and Q1 2016, operating Patmi grew 10.6 per cent in the first quarter this year on the back of higher contributions from development projects in China, new contribution from CapitaGreen, and better operating performance for the shopping mall and serviced residence businesses.

A change in the use of a development project, Raffles City Changning Tower 2, from construction for sale to leasing as an investment property in Q1 2016 resulted in a S$30.5 million fair-value gain, which translated to a 43 per cent rise in the share of results of associates to S$122.6 million.

"CapitaLand is well positioned to ride through current market challenges and to seize opportunities given our strong balance sheet and resilient recurring income stream," said CapitaLand president and group CEO Lim Ming Yan.

"We will seek attractive investment opportunities to grow our recurring income and to maintain development gains from trading assets. The group will maintain our focus on core markets of Singapore and China, growth markets of Vietnam and Indonesia, as well as our serviced residence global platform.

"In addition to capital recycling and portfolio reconstitution, we will also leverage our fund management platform and management contracts to grow our assets under management."