CapitaMalls Asia (CMA) has reported a net profit of $96.8 million for the first quarter of the year – higher than last year’s $10.3 million – as the mall operator saw higher rental income from its majority-owned malls and recorded profits from the units sold in The Orchard Residences.
Revenue for the three months ended 31 March 2010, increased 41 percent from $52.9 million in 2009 to $74.6 million.
“We achieved a strong first-quarter profit on the back of economic recovery in our key markets of Singapore, China and Malaysia,” said Mr. Liew Mun Leong, chairman of CMA, which has stakes in and operates 87 retail properties across five countries – Singapore, Malaysia, China, India and Japan – with a total property value of $20.4 billion.
Aside from the higher rents and units sold in The Orchard Residences, the revenue increase for the first three months of 2010 also came from profit contributions from the fee management business, contribution from the newly-opened Ion Orchard mall in Singapore and fair value gains on revaluation of two properties.
Earnings per share in Q1 2010 was 2.5 cents, up from 0.6 cents from the same period a year ago.
Looking ahead, CMA said it will continue to pursue development opportunities and selective acquisitions. The retail company is also well positioned to take advantage of the growth potential in Asia.
In Singapore, where CMA gets the bulk of its earnings, the retail firm will “continue to create more value” from its portfolio of existing assets including Jurong Entertainment Centre and Raffles City Singapore, pursue selective acquisition and development opportunities, as well as focusing on the development of its One-North project, it said.
Mr. Donald Chua, an analyst from CIMB-GK, issued a fresh “underperform” call on the stock, citing the “yield gestation” needed for the China malls owned by CMA.
“While CMA’s edge over its local competitors in mall management is apparent, average rents remain low with net property income yields (at 2-plus per cent) of immature malls in the second tier cities still some way off CMA’s target of 8-9 per cent,” said Mr. Chua. “We think the malls will need 1-2 rental cycles for rents and yields of its current portfolio to stabilise.”
In contrast, DBS Group Research issued a new “buy” call. DBS’s analysts said that the catalyst for the stock lies in its capacity to purchase new assets.
CMA gained one cent to close at $2.30 yesterday.