Property giants miss analysts’ profit estimates
SINGAPORE: Property giants City Developments Ltd (CDL) and CapitaLand Investment Ltd reported bigger-than-expected declines in full-year profits, after being battered by high interest rates and a global real estate downturn.

Net income at CDL dropped to S$317mil for the year ended December, down 75% from a record in 2022, the city-state’s largest listed developer said yesterday. That missed the S$358mil average analyst estimate compiled by Bloomberg.

Real estate investment manager CapitaLand Investment said net income fell 79% to S$181mil. That fell short of a consensus estimate of S$815mil.

The results cap a tough year for the firms. Singapore’s residential market is cooling, China remains mired in a three-year housing crisis and a commercial real estate slump is reverberating around the world, hurt by the double whammy of high interest rates and post-pandemic remote work.

CDL pointed to higher financing costs and the absence of substantial divestment gains compared to 2022. CapitaLand Investment said it was impacted by valuation losses in China and the United States.

Shares of CDL fell as much as 2.2% in Singapore yesterday morning, while CapitaLand Investment climbed 0.7%. Both stocks have been pummelled in the past year, losing more than 20% of their value.

CDL’s results were “resilient” despite an “extremely challenging year for the global real estate sector, with a high interest rate environment, inflation, weak global economies and geopolitical tensions”, executive chairman Kwek Leng Beng said in a statement.

Kwek also highlighted the challenge posed by measures to cool the local housing market. Singapore’s developers last year sold the fewest private residential units since 2008 after authorities raised stamp duties.

Still, a recovery in residential and hotel earnings has helped to cushion the blow. CDL’s revenue rose 50% to a record S$4.94bil last year.

That beat analysts’ average estimate of S$4.08bil.

For CapitaLand Investment, which is backed by state investor Temasek Holdings Pte, its sizeable property holdings in China remain a major drag. About 34% of its S$134bil in assets under management are in the country, the largest slice of its geographical allocation. It made divestments of S$2.1bil last year.

Revenue fell 3.2% to S$2.78bil in 2023, in line with analysts’ estimates.

The company said it is on track to meet a 2024 target of S$100bil worth of funds under management and announced a new goal of doubling it to S$200bil in the next five years.

Chief executive officer Lee Chee Koon said the firm will “optimise” its China portfolio and grow yuan-denominated funds, as well as increase fund product offerings in markets including Japan, South Korea and Australia.

That may take time, with a pickup in deals likely to happen only if interest rates drop in the second half of 2024, Bloomberg Intelligence analysts Ken Foong and Patrick Wong said in a note before the earnings. — Bloomberg
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Property giants City Developments Ltd (CDL) and CapitaLand Investment Ltd reported bigger-than-expected declines in full-year profits, after being battered by high interest rates and a global real estate downturn.