CapitaLand H1 profit up at S$922.2m from S$96.6m on portfolio gains, market recovery
CAPITALAND C31 turned in a better financial performance for the first six months of 2021, though it expects a patchy pace of recovery across its geographies and sectors amid resurging virus cases and uneven vaccination rates globally.
The property giant reported a net profit of S$922.15 million for the first half ended June 30, 2021 - nearly 10 times the S$96.6 million chalked up in H1 FY2020 - on the back of nascent economic recovery in its core markets, Singapore and China.
The bottom line was strengthened by a better operating performance, higher gains realised from asset recycling as well as the absence of revaluation losses from its portfolio of investment properties.
"All engines are firing again," said group chief executive officer Lee Chee Koon in a virtual earnings briefing on Friday morning. "Let's hope we can continue to keep this momentum even as we proceed cautiously in the coming few months against the backdrop of Covid-19."
Its two hardest hit sectors, retail and lodging, are showing signs of recovery, with operating earnings before interest and taxes (Ebit) higher vis-a-vis both H1 2020 and H2 2020, although the operating Ebit for both segments has yet to rebound to pre-pandemic levels.
CapitaLand's revenue for H1 FY2021 rose 34.7 per cent year-on-year to S$2.73 billion, underpinned by higher handover of residential units in China and progressive revenue recognition from One Pearl Bank in Singapore.
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Operating profits after tax and minority interests (Patmi) rose 66 per cent to S$433.6 million, while earnings per share clocked 17.7 Singapore cents for the half year, up from 1.9 cents in H1 FY2020.
The higher operating profit was supported by higher transactional fee income from CapitaLand's listed real estate investment trusts and unlisted funds, lower rental rebates doled out to tenants as well as higher contribution from development projects. On a gross basis, the group provided rental rebates and marketing support of over S$50 million to affected tenants in the first six months of the year.
For the six months ended June, 30, 2021, overall fee income rose nearly 36 per cent year-on-year to S$416.9 million, with improvement registered across all fee income segments.
Meanwhile, its fund management fee-related earnings (FRE) rose about 29 per cent year-on-year to S$188.7 million, while funds under management grew 6.9 per cent to S$83 billion from S$77.6 billion as at end December 2020 as it works towards a S$100 billon target by 2024.
"Our fund management FRE is showing good progress. We are essentially at a clip north of our pre-Covid levels," said group chief financial officer Andrew Lim.
Its lodging business is also showing green shoots, with overall revenue per available unit (RevPAU) in Q2 up 53 per cent year-on-year and 19 per cent quarter-on-quarter. Performance varies across markets though, owing to different vaccination rates, the strength of domestic demand and a fresh wave of Covid-19 cases in certain markets. However, the group's management is hopeful of a "better six months ahead" as countries push forward with their vaccination efforts.
Year-to-date, CapitaLand said it has ploughed S$3.6 billion towards investments, zeroing in on new economy assets such as data centres and business parks as well as longer-stay lodging assets - such as purpose-built student accommodation and private rental housing - which have weathered the pandemic relatively well.
The latest set of results will be the last for CapitaLand after its shareholders voted in favour of the group's proposal to carve up its business into a privately-held development arm, and a new, listed unit for its fund-management and lodging-management businesses, as well as its real-estate investments. CapitaLand will operate as two distinct entities from September: the newly listed CapitaLand Investment (CLI), and the privatised CapitaLand Development.
Where dividends are concerned, CLI will retain a dividend policy of minimum 30 per cent of cash Patmi. Mr Lim added: "If CLI is able to continue to recycle well, grow well, generate good recurring cash PATMI, we will be in a good position to review the dividend policy with the hopes of raising the floor from 30 per cent." In the past, CapitaLand has generally paid out 40-plus per cent of cash Patmi.
In an update on its residential segment, CapitaLand said that the total sales value and number of units moved in H1 2021 in Singapore was nearly six times that of H1 2020. The 696-unit CanningHill Piers, the residential component of a mixed-use project on the former Liang Court site that it is jointly developing with City Developments, is expected to launch next month.
In China, the group sold 2,625 residential units in H1 2021, or 48.4 per cent more year-on-year, while the sales value was 43.3 per cent higher at over eight billion yuan (S$1.7 billion). It handed over 1,453 units - up from 652 units in the corresponding period last year - with a handover value of 4.95 billion yuan.
The group said that some 6,700 units in China with a value of about 14.1 billion yuan are poised to be handed over from Q3 onwards.
Year-to-date, the group has made gross divestments to the tune of over S$11.2 billion, pipping its S$3 billion annual capital recycling target. In response to a question on its plans for ION Orchard in Singapore, its management said on Friday that it wants to stabilize the mall's performance before it considers a sale.
Shares in CapitaLand closed at S$4.10 on Friday, up one cent or 0.24 per cent.
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