CapitaLand’s 2Q14 PATMI increased 14.5% YoY to S$438.7m, mostly due to improved operating profits, higher revaluation gains from investment properties and write-back of impairments. Year to date PATMI cumulates to S$621.5m, which we judge to be broadly within expectations. Topline for the quarter came in at S$875.3m, down 13.2% YoY, mostly due to lower revenue from development projects in Singapore and China, partially offset by higher sales in development projects in Vietnam and higher rental revenue from the group’s shopping mall and serviced residences businesses.

Over 2Q14, we saw 161 residential units sold in Singapore, up versus the 139 units sold in 2Q13. In China, however, residential sales in 2Q14 dipped 44% to 1,054 units. We will be speaking to management regarding these results and, in the meantime, put our Buy rating and fair value estimate of S$3.79 UNDER REVIEW.

Source: OCBC Research - 5 Aug 2014