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CapitaLand Limited’s 2018 Earnings Update: Ending the Year on a High Note

One of Asia’s largest real estate outfits, CapitaLand Limited (SGX: C31), announced its financial results for the full year ended 31 December 2018 this morning. Let’s look at the key highlights from the announcement here:

1. Revenue for 2018 grew 21.3% to S$5.60 billion, up from S$4.62 billion a year ago. The improvement was due to 1) contributions from newly acquired and operational properties in Singapore, China, Germany and the United States; 2) higher handover of units from residential developments in China and Vietnam; and 3) consolidation of revenue from CapitaLand Mall Trust (SGX: C38U), CapitaLand Retail China Trust (SGX: AU8U) and RCS Trust.

2. Gross profit climbed 32.9% year-on-year to S$2.69 billion, and profit from operations increased by 31.6% to S$3.19 billion.

3. Consequently, net profit rose 12.3% to S$1.76 billion, an increase from S$1.57 billion a year ago. The 2018 net profit is the highest achieved since 2008.

4. Diluted earnings per share swelled from 34.4 Singapore cents to 39.0 Singapore cents.

5. For the year, operating net profit, which excludes one-off gains or losses and the sale of 45 units of The Nassim in 2017, improved 13.8% to S$872.2 million.

6. As of 31 December 2018, the property giant had S$5.06 billion in cash and cash equivalents, and S$23.63 billion in total debt. This translates to a net debt position of S$18.57 billion. In comparison, a year ago, it had S$15.59 billion in net debt (cash of S$6.11 billion and total debt of S$21.69 billion).

7. The following shows how CapitaLand’s liquidity position changed from 2017 to 2018:Source: CapitaLand Limited 2018 earnings presentation

8. Net asset value per share at end-2018 grew 4.8% to S$4.55 from S$4.34.

9. CapitaLand’s return on equity (ROE) in 2018 stood at 9.3%, up from 8.6% in 2017. The growth was mostly on the back of portfolio gains from recycling properties of around S$4.0 billion in gross value, stronger recurring income contributed by newly acquired and operational assets, and revaluation gains.

10. The company’s board is proposing a first and final dividend of 12 Singapore cents per share for the year, unchanged from 2017.

11. Looking ahead, Lee Chee Koon, president and group chief executive of CapitaLand, said:

“While CapitaLand continues to leverage and strengthen our existing business and asset portfolio, we will seek out new growth drivers to bring us into the next phase of growth. In this regard, we have announced the proposed acquisition of Ascendas-Singbridge to create Asia’s largest diversified real estate group with assets under management (AUM) of over S$116 billion. The transaction will strengthen our presence and pipeline in our core markets – Singapore and China. It will give us immediate scale in new economy sectors such as logistics and business parks, and in growth markets such as India, the U.S. and Europe.”

At CapitaLand’s current share price of S$3.43, it has a price-to-book ratio of 0.75 and a dividend yield of 3.5%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore recommendations on CapitaLand Limited, CapitaLand Mall Trust and CapitaLand Retail China Trust. Motley Fool Singapore contributor Sudhan P owns units in CapitaLand Mall Trust.