Singapore Corporate News - 1 Aug 2007

CapitaLand Q2 profit hits a quarterly record of $912.6m

CAPITALAND'S second-quarter group net profit jumped almost six-fold to a quarterly record of $912.6 million, fuelled by fair value and portfolio gains and higher profits from development projects.

The $912.6 million net earnings - against $157.2 million for the previous corresponding quarter - boosted the property giant's half-year net profit from $286.7 million in H12006 to $1.52 billion in H12007, surpassing its $1.02 billion record net profit for the whole of last year.

The fair value gains came from the group's investment properties portfolio. They resulted from the adoption of Financial Reporting Standard 40 on Investment Property which requires fair value gains to be recognised in the income statement.

CapitaLand booked fair value gains of $645.4 million in Q22007 and $647.4 million (including from the Temasek Tower office block which has since been divested in April) in H12007. But even stripping out these revaluation gains, H12007 net profit would still have been $873.3 million, three times the $286.7 million for the corresponding period last year. Similarly, Q2 net earnings excluding the revaluation gains would have been $267.2 million, a 70 per cent year-on-year improvement.

The bulk of H1 revaluation gains were for Singapore properties amounting to $599.3 million.

CapitaLand booked net divestment gains of $85.5 million in Q22007, up from $8.1 million in Q22006. For H12007, the group's divestment gain was $166.3 million, up 150 per cent from $66.4 million in H12006.

Earnings before interest and tax (Ebit) from residential strategic business unit (SBU) jumped 71.7 per cent to $492.5 million in H12007, with Singapore (residential) operations posting a 146 per cent increase in Ebit.

Commercial SBU's H12007 Ebit of $1.11 billion was almost 11 times the $101.4 million figure for the same year-ago period, due to improved operating results, divestment gain from Temasek Tower and unrealised fair value gains from the revaluation of investment properties.

Ebit from financial services rose 78 per cent in H1 to $45.4 million. Ebit margins for the Singapore residential business increased from 13.9 per cent in H12006 to 39.6 per cent in H12007, while China residential Ebit margins rose from 30.4 per cent to 39.9 per cent over the same period.

CapitaLand China CEO Lim Ming Yan said that going forward, a more sustainable Ebit margin from China residential business would be in the order of 25-30 per cent. Singapore accounted for 69 per cent of H12007 Ebit, up from a 29 per cent share in H12006.

On the group's bid last week for the former NCO Club site, CapitaLand Group president and CEO Liew Mun Leong indicated that if CapitaLand is successful, it could rope in partners for the project's different components - office, hotel, residential and retail. 'But as the party fronting it, we are prepared to take the whole thing,' he added.

Mr Liew stressed that 'the Singapore office sector will remain a core holding' to the group but that it will reconstitute its portfolio by divesting some existing office assets and investing in new developments. An example would be the group's divestment of Temasek Tower earlier this year and its bid last week for the former NCO Club and Beach Road Camp grounds.

CapitaLand chief investment officer Kee Teck Koon observed that for a few of the group's office buildings which are held through joint ventures, such as Hitachi Tower, Chevron House (formerly Caltex House) and 1George Street, CapitaLand will have to work with its respective partners on any divestment. 'What I can say is that at this point, because the market is so buoyant, obviously there are partners who are keen to look at the possibility (of divesting) but it is not conclusive.'

Earnings per share (EPS) rose from 5.7 cents in Q22006 to 32.6 cents in Q22007. First-half EPS rose from 10.4 cents to 54.4 cents. Net asset value per share increased from $2.65 as at Dec31, 2006 to $3.12 as at June30, 2007. Revenue increased 21.2 per cent to $935.6 million for Q2 and by 9.9 per cent for the first half to $1.57 billion.

In Singapore, the group sold 1,260 homes for a total $2.9 billion in H12007.

Cosco S'pore Q2 net rises 58% to $80.4m

COSCO Corp Singapore, the ship-repair and bulk-shipping unit of China's largest shipping company, said yesterday that second-quarter profit rose 58 per cent, thanks to greater shipyard demand and higher-margin work.

Net profit climbed to $80.4 million, or 3.6 cents a share, in the three months ended June 30, from $51 million, or 2.31 cents, a year earlier.

Turnover was $512.3 million, about double the previous Q2's $265.3 million. This was backed by strong demand for ship repairs, conversions, newbuildings and offshore marine engineering projects.

The company benefited from its ascent up the value chain as it secures more orders for semi-submersible rigs, heavy lift vessels, rig and FDPSO (floating, drilling, production, storage and offloading) vessels.

This brought Cosco's half-year net profit to S$122.3 million, up 38 per cent from a year earlier, on the back of a 63 per cent rise in turnover to S$868.1 million.

The company is benefiting from China's voracious appetite for iron ore, coal and other raw materials, which is in turn driving orders for new bulk carriers as well as repairs.

This demand also saw the company's fleet of 12 bulk carriers enjoy healthy charter-hire rates due to a record high Baltic Dry Index.

The Cosco Shipyard Group, in which Cosco Singapore has a 51 per cent stake along with SembCorp Marine with 30 per cent, currently has orders for 44 bulk carriers, of which 24 are from its Beijing-based parent.

Cosco won US$1.96 billion in contracts in the quarter, with its order book standing, as at June 30, at US$2.8 billion.

Cosco Singapore vice-chairman and president Ji Hai Sheng reconfirmed the company's intention to eventually sell off its 12 bulk carriers - its parent operates nearly 250 of the vessels - but gave no timeframe.

'I want to further restructure Cosco Corp Singapore to have a pure ship-repair, marine engineering and newbuilding group,' he said.

'My plan is to make Cosco Shipyard Group stronger,' Mr Ji added. 'Even though we are No1 in China, we need to take advantage of the lower costs now in China', to expand before land and other costs become more expensive.

It is these same factors - lower labour, land and material costs - that will help the shipyard group remain competitive, said Mr Ji, when asked if he was concerned about rising competition from Dubai World, which has just acquired Pan-United Marine as it begins expanding into Asia.

On competing with Dubai in China, Mr Ji said: 'There is a possibility, but doing business in China, local people have more advantages.'

CDL Hospitality Trusts' Q2 earnings beat forecasts

CDL Hospitality Trusts (CDL HT) has reported better-than-projected earnings for the second quarter.

CDL HT - a stapled group comprising CDL Hospitality Real Estate Investment Trust (H-Reit) and CDL Hospitality Business Trust - said yesterday its income available for distribution to holders of stapled securities amounted to $14.8 million, from April to June this year.

That's 52 per cent higher than the $9.8 million which it projected, in its initial public offering (IPO), that it would earn during the three-month period.

Second-quarter gross revenue was $20.7 million, 48 per cent higher than projected. Its net property income totalled $19.5 million, 52 per cent higher than forecast, and its net income amounted to $18.0 million, more than double the $8.7 million expected.

Its income available for distribution per stapled security came to 2.11 cents for the period - and 8.46 cents on an annualised basis. The total number of stapled securities was 702.4 million.

Its annualised distribution yield was 10.19 per cent, based on its IPO price of 83 cents, and 3.69 per cent, based on its closing market price of $2.29 on Monday.

For the entire half-year period from January to June this year, CDL HT reported income available for distribution to holders of stapled securities of $27.1 million - some 40 per cent more than projected. Its revenue was $38.7 million, 38.8 per cent more than IPO projections.

CDL HT listed on the Singapore Exchange on July 19. It now owns five hotels and one shopping arcade in Singapore - Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel, Copthorne King's Hotel, Orchard Hotel Shopping Arcade and Novotel Clarke Quay - as well as one hotel in New Zealand, the Rendezvous Hotel Auckland.

The trust also said it had benefited from the positive growth of the tourism and the hotel sector. Its average occupancy rate in the January-June half was 84.4 per cent, against an indicative 78.6 per cent. Its average daily room rate was $193 for the six months, against an indicative $160.

'CDL HT has grown and performed very well in the last six months,' said Vincent Yeo, CEO of M&C Reit Management Limited, manager of H-Reit. 'As Singapore's largest hotel operator by number of rooms, we are well-positioned to capitalise on the current growth in the tourism and hotel sectors. In addition to the strong organic growth inherent in our portfolio, we will continue to seek yield-accretive acquisition opportunities to deliver higher returns to our security holders.'

Pacific Healthcare announces joint investment with KFHM

PACIFIC Healthcare Holdings and Kuwait Finance House Malaysia (KFHM), a wholly owned subsidiary of Islamic banking leader Kuwait Finance House (KFH), will jointly invest $7.26 million for a 30 per cent stake in Radlink Asia.

KFHM will invest $4.36 million in Pacific Holdings' wholly owned Synergy Healthcare Investments, which had exercised an option to acquire a 30 per cent stake in Radlink for $7.26 million in March.

Radlink is an independent provider of diagnostic imaging and radiography services in Singapore.
KFHM's managing director K Salman Younis said demand for quality healthcare services is growing and the joint investment will complement KFHM's other healthcare investments.

KFHM has a diversified portfolio of investments ranging from healthcare to education.

KFH made an US$869 million profit in the first half of 2007 and has assets of US$27.94 billion.

Pacific Healthcare Holdings, which was listed on the main board of the Singapore Exchange in 2005, is involved in a range of medical fields such as cardiology, cosmetic surgery and aesthetic medicine, obstetrics and gynaecology.

'The diagnostic service business is fast-growing and scalable. The ability to detect disease states early is the key to preventive healthcare,' said Pacific Healthcare chief executive William Chong.

Pacific Healthcare, which also has operations in Hong Kong, China and India, is eyeing Vietnam and possibly the Middle East next.

Pacific Holdings signed a joint venture agreement with KFHM in February this year to jointly invest up to $32 million, either in cash or by injecting businesses, in setting up new medical centres in Asia.