Following is the transcript of a First On CNBC interview with Lim Ming Yan, President and Group CEO of CapitaLand. The interview was broadcast on CNBC on 15 February 2017 at 08:10AM SG/HK Time.
All references must be sourced to a "CNBC Interview".
Interviewed by Bernie Lo, Anchor, CNBC and Dan Murphy, Correspondent, CNBC.
Dan Murphy: Now first and foremost I wanted to focus on the outlook as I mentioned just before, you said it was unpredictable and uncertain and I'm wondering what CapitaLand is doing to mitigate some of the risks that you might see stemming towards the rest of the year, if that is indeed the environment that you see operating in.
Lim Ming Yan: When we started FY2016 there's the same outlook that we were observing but we have delivered a good set of results for 2016. I think what is most important within this set of results in 2016 is that the operating PATMI that means to PATMI the portion of the PATMI that comes from the other operations is a significant 73 per cent of the total PATMI, and at 865 million - so that in itself is a record year for CapitaLand since it's listed in 2000. So that cash PATMI will actually help us in terms of riding through the uncertainties that we are seeing now in the global market. I think it was mentioned many times by many different people about the geopolitical situation, and we are very glad to see that in fact right now there's a good chance that there will be a very constructive relationship between the U.S. and China.
Dan: OK. So that's actually worrying you on the outlook, that foreign relations that you see potentially impacting the business moving forward is that right?
Lim: I will say it more the relationship between China and the U.S. So these are the two largest economy in the world. And if there's a good trade relationship and economics environment is generally positive I think that will be - all goes very well for businesses in general operating in this part of the world.
Bernie Lo: I'm just kind of wondering some of the comments that we're getting like you know the company expects property cooling measures by the Chinese government to have some impact on the outlook, on the residential market. There's plenty of demand and I'm just kind of wondering if it is typical for capital and to maybe err on the side of caution a little bit because you know by all accounts there's still plenty of demand. What they're trying to do is just control that demand so what prices do not spiral so far out of control, that people end up in potential negative equity positions or people, some people are priced out of markets you know for decades to come because that's not socially what is desirable. I mean you know the caution is caution but in different forms I kind of wonder if the conservatism might be a little bit overstated.
Lim: Bernie, you're absolutely right. I think the market in China is not a one single market. I think the market is underpinned by a relatively high economic growth - it's between six to seven, six to 6.5 per cent projected FY 2017. And in addition to that I think there's a significant urbanization that's taking place. So we have very much been focusing on the Tier 1 and the Tier 2 cities. And the cooling measures, the way I look at it, or some other measures to prevent the property prices from running away, really is to make sure that properties remain affordable. I think that is, in fact, will make it a lot more resilient and sustainable for the long term. So from that perspective I think CapitaLand remains positive about the residential market in the first tier cities and many of the upper second tier cities.
Bernie: One of the things that CapitaLand has strived for over the years is to balance your portfolio so, use cyclically, you have defenses up when some parts of your assets are going through softer cycles. Now with 36 per cent of your total assets in Singapore, 45 per cent in China as your core markets, you do have new budding markets in Indonesia, of course Malaysia and Vietnam, which you are increasingly engaged in. In an ideal world do you think that 36 and 45 per cent exposure respectively in Singapore and China is still a little bit too high to overexpose those two key markets? Would you see other markets perhaps even some names that don't exist now appearing on your on your plate in the near future?
Lim: Yeah we are constantly looking at how we can rebalance our portfolio. I think as that now, I think China given the size of the Chinese economy, taking out the so-called lion's share I think that is something to be expected. Singapore being the home market for CapitaLand our 36 per cent now is something that we are comfortable with as well. So but having said that, we will constantly be looking at opportunities across the different markets that we have presence in. So we will continue to want to grow our business presence in Vietnam. We will also be looking at Indonesia. These are major markets within this region and to our service apartment business as well we have also been looking at markets beyond Asia in Europe as well as in the U.S.
Editor's Note: This text was modified from the original transcript to accurately reflect the year when CapitaLand was first listed.