CapitaMalls to 'latch on' to China to secure growth prospects

CapitaMalls Asia, the retail property unit of Southeast Asia’s largest developer, plans to “latch on” to China as increased spending bolsters the nation’s economic growth.

The company plans to open 14 malls in China over the next three years, compared with four in Singapore and seven in India, it said in a statement today. Three of the shopping centers will open in Beijing, Shanghai and Harbin in the second half of this year, it said.

“We should continue to grow in China,” Chief Executive Officer Lim Beng Chee said at a press conference in Singapore today. “If we latch on to China’s growth, we will also have growth in the next 10 to 20 years.”

 

The expansion in China will increase the company’s presence in a market that’s already its biggest, making up 44% of its $6.2 billion of assets. Its home base of Singapore trails behind at 43%, according to a slide presentation today. CapitaMalls said in March it applied for a secondary listing in Hong Kong to enhance its attractiveness to investors in the mainland.

Investment by local governments and private businesses helped drive a 9.5% gain in second-quarter gross domestic product from a year earlier, the National Bureau of Statistics said last week. Investment accounted for more than half of the nation’s expansion in the first six months of the year.

The growth came even after the central bank boosted lending rates five times since mid-October and lifted bank reserve requirements to a record.

 

“The banks are also desperately looking for good exposure, so I’m not overly worried,” Chief Financial Officer Ng Kok Siong said at a press conference today. “In our relationship with Chinese banks, we do have an advantage given that our assets are transparent, our cash flow is transparent and there’s also a pedigree advantage as far as Temasek and CapitaLand are concerned.”

 

CapitaMalls is a unit of CapitaLand, whose biggest shareholder is Temasek Holdings, Singapore’s state-owned investment company.

 

CapitaMalls Asia’s second-quarter net income doubled to $164.9 million from $82.1 million a year earlier, according to its statement today.