• 4Q15 results broadly in line
• Buoyant home sales in China
• FV estimate dips to S$3.68

4Q15 results within expectations

CAPL’s 4Q15 PATMI decreased 39.5% YoY to S$247.7m mainly due to lower fair value gains from the revaluation of investment properties and profit contributions from Westgate Tower. Excluding the impact from the sale of Westgate Tower, the group’s operating PATMI in 4Q15 would have improved by 55.7% given higher profits from its China’s residential business and better operating performances from its shopping mall and serviced residences segments. Full year FY15 PATMI now cumulates to S$1,065.7m, which we judge to be broadly in line with expectations after accounting for one-time items and fair value gains.

Record home sales in China

Chinese residential sales continued at a healthy clip with 2,910 units sold in 4Q15 – up 73.9% YoY versus the 1,673 units in 4Q14 – and full year sales of 9,402 homes in FY15 were 89.5% higher than the 4,961 units sold in FY14. In Singapore, CAPL sold 244 units in FY15, down marginally from 278 units last year. At CapitaLand Malls Asia, same-mall NPI growth in Singapore remained stable at 2.7% in FY15 (versus 2.5% in FY14) while this slowed to 7.4% (versus 19.9% in FY14) for their Chinese malls.

Other operating measures in their Chinese

portfolio have also broadly dipped, i.e., shopper traffic growth from 4.8% in FY14 to 3.25 in FY15; tenant sales from 9.3% psm to 7.5%; committed occupancy rate from 94.8% to 94.2%. We understand that this is attributed to maturation of new malls, a change of retail mix and also enhancements initiatives, and management indicates they to see healthy rental reversions in China.

Maintain BUY; FV estimate dips to S$3.68

The group’s balance sheet remains healthy; net gearing dipped marginally to 48% from 57% as at end FY14 while its cash balance increased to S$4.2b from S$2.7b. A dividend of 9.0 S-cents per share was proposed. Maintain BUY; we update our valuation model with softer ASPs and higher discount rates and our fair value estimate dips from S$4.07 to S$3.68.

Source: OCBC Research - 18 Feb 2016