As investors who are learning how and where to invest money in Singapore, it is important to listen to the financial performance of firms in the fiscal year. Such presentations give you a clue on the latest developments and can often be found on the company’s website. However, it can be difficult to sit down for hours straight to listen and distill what management is saying. This is a short overview of what transpired during Capitaland’s presentation for financial year 2019.
Capitaland released its results on the 26 of February 2020. Revenue was up 11.3% year on year and operating PATMI was up 21.2%. Most of this revenue and profit growth came as a result of acquiring Ascendas Sing Bridge, higher rental revenue from malls in Singapore and China as well as lodging properties in the USA.
While the acquisition of Ascendas Singbridge helped to grow revenue, it also weakened Capitaland’s balance sheet. At the point of acquisition, Capitaland’s net debt to equity gearing was at 73%. To the company’s credit, they projected that they can reduce gearing to 64% by 2020-2021 and were able to do it in first quarter of 2020. This was in part due to recycling of some of its assets into its Reits and other off take vehicles.
What is perhaps the largest preoccupation when anyone talks about Capitaland is its business in China. Capitaland owns about 12 malls in China and also has a REIT(Capitaland Retail China Trust) which is solely focused on retail in China. With the outbreak of COVID-19 in China, many are concerned about the situation at Wuhan, which is the epicenter of the outbreak as well as other key Chinese Cities.
To date, Capitaland’s management has shared that the 12 malls are still closed but they have provided some relief for tenants by offering rental rebate for the long Chinese New Year Break. Malls in Wuhan received full waiver, which amounts to about 40 mil rmb whereas other Capitaland malls in key cities had about 50% waiver. All in all, Capitaland is looking at about 100 mil rmb in assistance to the tenants of its malls in China.
