CapitaLand announced its 3Q18 results this morning which met our expectations. Revenue declined 16.9% YoY to S$1,260.0m but gross profit jumped 15.3% to S$583.7m.

The dip in revenue was largely due to lower contributions from development projects in Singapore and China, but partially offset by higher rental income. PATMI and operating PATMI rose 13.6% and 13.3% YoY to S$362.2m and S$233.7m, respectively.

For 9M18, CapitaLand’s revenue jumped 16.8% to S$3,978.0m; PATMI was down marginally by 0.4% to S$1,286.8m, while operating PATMI fell 13.1% to S$658.4m and this formed 71.3% of our FY18 forecast.

CapitaLand has been active on its capital recycling strategy, making total investments of S$6.1b YTD. This has been partially balanced by divestments amounting to S$4.0b, which generated gains of S$288.7m.

Looking ahead, CapitaLand has close to 3.5k residential units which are ready to be released in China in 4Q18.

On the retail front, it has a pipeline of 1 and 11 properties which are targeted to be open in 2018 and 2019 and beyond, respectively, across its portfolio.

We will provide more updates after the analyst briefing. We currently have a BUY rating and S$4.09 fair value estimate on CapitaLand.

Source: OCBC Research - 14 Nov 2018