By Kevin Lim & Daryl Loo (The Edge)

SINGAPORE: CapitaLand, Southeast Asia’s largest developer, reported a surprise 49% jump in quarterly earnings on strong home sales, and said it plans to dig into its S$4.4 billion (RM10.06 billion) cash pile for expansion in countries such as India and China.

The company also warned the year ahead could be rough going as investors and would-be home buyers shy away from property purchases amid volatile financial markets and expectations of a global economic slowdown.

“Current weakness in the US housing market and economy and the tight credit environment will likely cast a cloudy outlook over the general economic and business conditions for at least the first half of 2008,” CapitaLand chairman Richard Hu said in a statement.

CapitaLand’s shares fell 1.6% by early afternoon, underperforming the broader market, which was off 1% as worries grew that the US economy had already tipped into recession.

Capitaland beat analysts’ forecasts with a fourth-quarter net profit of S$674.7 million due to strong home sales in its key markets of Singapore, China and Australia, and a gain on the revaluation of its assets.

Earnings were above the average forecast of S$350 million by five analysts polled by Reuters.

However, analysts noted that the better-than-expected results, which compared with a year-ago net profit of S$453.5 million, were mainly due to a S$136.8 million revaluation gain on assets.

CapitaLand’s earnings for the full year rose 173% to S$2.8 billion, beating the S$2.2 billion mean forecast of 14 analysts polled by Reuters Estimate.

“Once again, divestment gains as well as portfolio revaluation gains accounted for a significant proportion of (net profit),” Deutsche Bank analyst Gregory Lai said in a note to clients.

Lai said after accounting for one-offs, core earnings were about 7% higher than his 2007 forecast of S$527 million.

Capitaland, which owns or manages 110 malls across Asia, said the current economic uncertainty could present buying opportunities and it plans to deploy its large cash holdings for new residential projects in China and malls in India and China.

The opportunities also include a joint venture with Australian unit Australand to invest in industrial and logistic properties across Asia, a company official said.

Chief executive Liew Mun Leong said in an earlier statement that Singapore’s residential market would remain robust, with prices rising 5%-10% this year due to demand from new immigrants and people displaced by redevelopment of existing housing projects.

Analysts, however, expect the company to be affected by slower sales growth and a slowdown in the meteoric rise of home prices in Singapore this year, as homebuyers hold off on purchases.

CapitaLand said 61% of its pretax earnings last year came from Singapore, up from 51% a year ago, while China added 23% and Australia contributed 12%.

Singapore’s private home price index, an indicator of profitability for CapitaLand, and rivals Keppel Land and City Developments, rose a slower 6.8% in the fourth quarter, reflecting concerns about global growth and the effect of government measures to cool the market. — Reuters

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