Assessing CapitaLand Limited’s (SGX:C31) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess C31’s recent performance announced on 31 March 2018 and evaluate these figures to its longer term trend and industry movements. Check out our latest analysis for CapitaLand
Did C31’s recent earnings growth beat the long-term trend and the industry?C31’s trailing twelve-month earnings (from 31 March 2018) of S$1.48b has increased by 8.22% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.96%, indicating the rate at which C31 is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is solely attributable to industry tailwinds, or if CapitaLand has seen some company-specific growth.
The rise in earnings seems to be propelled by a solid top-line increase outpacing its growth rate of costs. Though this brought about a margin contraction, it has made CapitaLand more profitable. Looking at growth from a sector-level, the SG real estate industry has been growing, albeit, at a muted single-digit rate of 3.04% in the past twelve months, . This is a change from a volatile drop of -2.57% in the previous couple of years. This growth is a median of profitable companies of 24 Real Estate companies in SG including Hong Lai Huat Group, Pan Hong Holdings Group and Far East Orchard. This means that whatever near-term headwind the industry is facing, CapitaLand is less exposed compared to its peers.In terms of returns from investment, CapitaLand has not invested its equity funds well, leading to a 7.19% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 3.03% is below the SG Real Estate industry of 3.60%, indicating CapitaLand’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for CapitaLand’s debt level, has declined over the past 3 years from 4.87% to 3.92%.
What does this mean?
Though CapitaLand’s past data is helpful, it is only one aspect of my investment thesis. While CapitaLand has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research CapitaLand to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for C31’s future growth? Take a look at our free research report of analyst consensus for C31’s outlook.
- Financial Health: Is C31’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.