CapitaLand Net Profit Up 11-Fold, Outlook Bullish

CapitaLand, Southeast Asia's biggest developer, said it has the warchest to buy more assets after posting an 11-fold rise in fourth quarter net profit, helped by a massive one-time gain.

The firm also gave a relatively better outlook for its commercial property business, after the unit posted a loss in the last financial year, hurt by falling rents and office values due to an economic downturn.

"We emerged from the crisis stronger than we entered it," Chairman Richard Hu said in a statement. "We ended the year with an improved net debt-to-equity ratio of 0.09, higher cash balance of S$8.7 billion and extended debt maturity of 4.4 years."

CapitaLand has since used part of that cash, buying Chinese property belonging to Hong Kong shipping company Orient Overseas for $2.2 billion last month.

CapitaLand, which is also Asia's second-largest property fund manager by assets, said it planned to significantly increase its presence in Vietnam and that it expects Australian unit Australand to perform better this year.

CapitaLand, which is 40 percent owned by Singapore state investor Temasek, will pay a first and final dividend of 5.5 Singapore cents as well as a special dividend of 5 Singapore cents for 2009, up from a total of 7 Singapore cents in 2008.

CapitaLand earned S$886 million ($625 million) in the three months ended Dec 31, up from S$78 million a year earlier. Its earnings were below the average forecast of around S$1.1 billion by three analysts polled by Reuters.

The fourth-quarter result included a one-time gain of S$899.8 million from the initial public offering of shopping mall unit CapitaMalls Asia in November, which offset revaluation and impairment losses on other properties.

Among CapitaLand's various business arms, the worst-performing was CapitaLand Commercial, whose main activity involves developing and managing office developments across Asia.

The unit posted a loss of S$273 million for the fourth quarter of 2009 compared with earnings before interest and tax (EBIT) of S$9.2 million a year ago.

"In Singapore, business confidence has improved and office rentals have shown signs of stabilising." CapitaLand said.

Singapore office rents fell 46 percent in the last three months of 2009 from a year ago, the steepest decrease among Asian cities, Colliers said earlier this week.

The property consultancy said although demand for office space was strengthening, the large influx of new supply could pressure rents over the medium term.

CapitaLand shares have fallen around 11 percent since the start of the year, double the 5.3 percent drop in the benchmark Straits Times Index.