CapitaLand, Southeast Asia's biggest property developer by market value, posted a 44 percent drop in quarterly net profit as property sales slowed and it had no big one-off gains, but it said the outlook was positive.
"Despite the cautious market sentiments, we have a positive outlook as our business units are competitively positioned and geographically diversified," CEO Liew Mun Leong said in a statement.
CapitaLand, 40 percent-owned by Singapore sovereign fund Temasek, earned S$515.2 million (US$376.9 million) in April-June, down from S$912.6 million a year ago, when earnings were boosted by unrealized fair value gains in its assets. Excluding one-offs, net profit for the 2007 second quarter was S$267.2 million.
The economic gloom has triggered a steep drop in the number of home sales, with some analysts predicting house prices will fall by up to 40 percent over the next three years.
"In such a challenging time, when many companies in the countries we operate in are unable to raise funds, we continue to be able to access the capital markets in view of the group's strong reputation and good financial standing," Chairman Richard Hu said in the statement.
CapitaLand said it was on track in preparing its first Malaysian retail real estate investment trust (REIT) for launch this year, bringing the number of its listed REITs to six.
CapitaLand earlier this month borrowed $1.5 billion to fund a residential project in Singapore that it plans to launch for sale in the first half of 2009, in a joint venture with Morgan Stanley Real Estate, Wachovia, and Singapore's Hotel Properties.
For 2008, CapitaLand is expected to post a 64 percent drop in earnings to S$1.02 billion from S$2.8 billion in 2007, according to the average of 16 analysts polled by Reuters. The 2007 results had included S$1.1 billion in revaluation gains. CapitaLand earned 61 percent of its income from Singapore in 2007, while Australia and New Zealand contributed 12 percent and China added 23 percent. But analysts are expecting weaker contributions from its Australia and
China businesses this year.
AustraLand, 54 percent-owned by CapitaLand, earlier this week reported a 79 percent fall in earnings and announced a rights issue to raise up to A$557 million ($526 million).
CapitaLand has committed to subscribe to A$302 million in the issue, which could boost its stake in AustraLand to 70 percent.
Shares of CapitaLand have fallen 9 percent this year, slightly outperforming a 15 percent drop in the Straits Times Index. Rival developer KepLand lost a third of its value, while City Developments lost 19 percent.