CapitaLand Investment reverses year-ago loss to post H2 profit of S$647m

Singapore

EVEN as it maintains global ambitions, CapitaLand Investment Limited (CLI) will largely focus on Asia over the next 5 years owing to the opportunities here as well as the group's track record and capabilities in the region.

Speaking at an earnings briefing on Friday (Feb 25) morning, group chief executive Lee Chee Koon said that it is already starting to see "more interesting opportunities emerging in China."

"The playing field has become a lot more level," he added, referring to the ability to gain access to projects, especially as some local players may not have the kind of access to financing that they have had in the past.

"(This) presents interesting opportunities for a company like CLI to create products, raise funds."

Chinese policymakers have implemented new financing rules known as the three red lines for real estate firms that assess refinancing against certain thresholds to curb debt among Chinese developers.

Pointing to "tremendous" opportunities in the region, Lee said: "If we can get the earnings right for the investors, (delivering) S$200-300 billion assets under management (AUM) just in Asia wouldn't be difficult."

CLI chalked up a net profit of S$647 million for the second half of the financial year ended Dec 31, 2021, versus a net loss of S$680 million in the same period the year before.

The real estate investment manager's revenue for the half year increased by 26.2 per cent year on year to S$1.24 billion from S$986 million.

Earnings per share (EPS) for the 6 months was S$0.153, compared with a loss per share of S$0.243 in H2 FY2020.

The higher revenue came on the back of topline growth in both the fee income-related business and the real estate investment business, improved operating performance from lodging assets with the easing of travel restrictions, and contributions from newly acquired assets in China and the United States.

The board is proposing a dividend of S$0.12 and a special dividend of S$0.03, bringing the financial year's total dividend to S$0.15, subject to shareholder approval.

This is higher than the minimum 30 per cent cash Patmi (profit after tax and minority interests) dividend policy that its management had previously signalled.

The group, which is targeting S$100 billion in funds under management (FUM) by 2024, had S$86 billion in FUM in 2021, up from S$78 billion in 2020.

Its lodging units under management rose 8 per cent to 133,000 units, as it strives to hit 160,000 units by 2023. In FY21, it secured about 15,000 units across 72 properties, as well as opened a record number of over 8,200 units, more than doubling the figure from FY20.

For FY2021, net profit was about S$1.35 billion in FY2021, reversing a net loss of S$559 million in FY2020.

The group's revenue increased by 15.6 per cent year on year to S$2.29 billion from S$1.98 billion, due to higher contributions from the fee income-related business (FRB) and the real estate investment business arising from higher transactional fees and contributions from newly acquired assets. FRB rose 15 per cent year-on-year to S$905 million.

EPS for the financial year was S$0.383, compared with a loss per share of S$0.199 the year before.

Touching on the Singapore office market, its management also emphasised that demand for office space remains even as the pandemic rages on.

"I think tenants and landlords are in agreement there is a need for office space, particularly sustainable, particularly in the Central Business District (CBD)," said chief financial officer Andrew Lim.

The group is cautiously optimistic for the current financial year as travel curbs eased in many markets in Q4 FY2021, although rising energy prices and ongoing supply imbalances will likely driving up near-term inflation.

Still, CLI said it is committed to achieving sustainable double-digit return on equity by growing its fund and lodging management platforms, as well as recycling at least S$3 billion worth of assets annually. Return on equity stood at 8.7 per cent in FY21, compared to -3.8 per cent in FY2020.

For its private equity business, it will also look outside of traditional real estate to "lower hanging fruit" such as data centres in China and hopes to raise a US$750 million fund this year to that end. In addition, it is pursuing a real estate credit strategy, and looking at other areas such as renewable energy and sustainability.

The counter closed at S$3.72 on Friday, up 9 cents or 2.48 per cent.