CapitaLand's net profit up 74% to $430.5m in 4Q16

Thanks to strong performance from China residential.

According to CIMB, CapitaLand (CAPL) reported 4Q16 revenue of S$1.85bn (+6.5% yoy) while net profit came in at S$430.5m (+74% yoy). Stripping out revaluations and one-off items, 4Q/FY16 net profit was S$289.1m/S$834.8m, up 16%/28% yoy.

FY16 core earnings beat CIMB's forecast by 17%, driven by better-than-projected performance from China residential, higher rental, and serviced residence income. Accordingly, ROE rose to 6.6% from 6.1% in FY15. The group proposed a higher DPS of 10 Scts for FY16, translating to a yield of 2.9%.

Here's more from CIMB:

In 4Q16, CAPL handed over 6,507 residential units valued at Rmb8.2bn in China, taking full-year recognition in China to c.Rmb16bn. The units were from projects including One iPark, La Botanica and The Metropolis in Kunshan.

It has >5,000 units remaining, sold at a value of Rmb8.9bn, to be handed over from FY17 onwards. In terms of launches, it has a further 8,000 launch-ready units for FY17, of which c.20% are in Tier 1 cities. Strong rental and serviced residence contributions

FY16 operating EBIT for CMA/Ascott rose 2.4%/3.8% yoy as operating metrics improved with tenant sales growth up 10.2% in China and 2.6% in Singapore. Another 1m sqm GFA of new space (c.10% of total portfolio) is scheduled to complete over FY17 - in China, Malaysia and India, including three Raffles City malls.

Once the properties stabilise, we anticipate the additional rental to boost recurring profit in the medium term.