• 3Q17 PATMI up 28.1% YoY
• In line with expectations
• Weaker CN home sales

3Q17 Results Within Expectations

3Q17 PATMI increased 28.1% YoY to S$317.0m from S$247.5m mostly due to fair value gains from Golden Shoe CarPark, the serviced residence component of Funan integrated development in Singapore and Citadines Biyun Shanghai in China, and portfolio gains from Wilkie Edge in Singapore, CapitaMall Anzhen in China and a 60% stake in CapitaLand Vietnam Commercial Fund I.

Accounting for one-time items, however, operating PATMI for the quarter fell 18.8% to S$204.5m. In terms of the topline for the quarter, 3Q17 revenues increased 9.7% YoY to S$1,507.2m mainly from stronger contributions from development projects in Singapore, higher rental income from new shopping malls and serviced residences, and the consolidation of revenues from CapitaLand Mall Trust, CapitaLand Retail China Trust and RCS Trust. Overall, we judge this quarter’s results to be broadly within expectations.

Softer CN Home Sales Due to Less Units Available for Sale

Due to fewer units being available for sale, CapitaLand’s Chinese home sales figures in YTD Sep 2017 fell to 7,233 units (worth S$12.7b) from 9,176 units (worth S$14.8b) over the same period last year. In Singapore, the group sold 293 units worth S$1.15b in YTD Sep 2017 versus 510 units worth S$1.24b over the same period last year.

We also saw CapitaLand Commercial Trust actively reconstituting its portfolio by acquiring Asia Square Tower 2 for S$2.09b, while divesting One George St and Wilkie Edge and redeveloping the Golden Shoe Carpark. The group’s serviced residence unit The Ascott Ltd also acquired an additional 60% stake in Quest Apartments Hotels in Australasia and an 80% stake in Synergy Global Housing in the United States.

The Ascott also added 19 properties to its portfolio through investments, management contracts and franchise agreements. Maintain BUY with an unchanged fair value estimate of S$4.13.

Source: OCBC Research - 8 Nov 2017