CAPL reported that its 1Q16 PATMI increased 35.4% YoY to S$218.3m. Excluding gains from the change in use of properties, operating PATMI grew 10.6% YoY mainly due to higher contributions from China development projects, new contributions from CapitaGreen, and improved operating performance from the group’s retail and serviced residences businesses.

In terms of the topline, 1Q16 revenues dipped 2.3% YoY to S$894.2m largely due to the absence of a S$59.6m fair value gain due to the change of use in Ascott Heng Shan Shanghai in 1Q15, reduced contributions from development projects in Singapore and Vietnam, partially offset by stronger residential sales in China and higher rental income from CapitaGreen and the serviced residences business.

Overall, we judge this quarter’s numbers to be broadly in line with expectations. The group’s Chinese home sales continued at a healthy clip with 3,377 units sold in 1Q16, up a whopping 3x versus 1,306 units in 1Q15, while operating performances at its Chinese mall portfolio remained steady with 1Q16 tenant sales and same-mall NPI growth up 1.0% and 7.0% YoY, respectively.

Maintain BUY with an unchanged fair value estimate of S$3.68.

Source: OCBC Research - 20 Apr 2016