Attractive Valuations; U/G to BUY
- 1H15 EPS ahead on fair-value gains. Recognition of pre-sold homes in China to power earnings in the year ahead.
- Raise FY15 EPS by 80% & RNAV to SGD4.64 from SGD4.53.
- Upgrade to BUY from HOLD on attractive valuations. TP climbs to SGD3.95 from SGD3.85 after adjustments to RNAV, still based on 15% discount to RNAV.
1H15 ahead on fair-value gains
- 1H15 net profit of SGD625m (+0.6 YoY) was ahead at 110% of our FY15F. This was due to fair-value gains.
- Stripping these out, core EBIT was broadly in line at 47% of our FY15F.
- Home sales in Singapore plunged YoY to 37 units (2Q14: 161 units) in 2Q15.
- EBIT declined 16.2% YoY to SGD202m.
- China sales nearly tripled to 2,764 homes in 2Q15 (2Q14: 1,054) on a relaxation in homepurchase rules.
- EBIT surged 132% to SGD265.7m, boosted by fairvalue gains as some development properties for sale were reclassified as investment properties.
- CMA booked higher rental income from Bedok Mall/Westgate and property-management fees from China.
- EBIT, however, was down 8.1% YoY to SGD289.2m after the divestment of a mall in Japan and lower revaluation gains.
- Ascott’s EBIT was also down 13.7% YoY to SGD98.0m on lower fairvalue gains.
- Overall RevPAU was up 1%.
Upgrade to BUY on attractive valuation
- We raise FY15 net profit by 80% and our RNAV to SGD4.64 from SGD4.53 mainly to reflect its fair-value gains.
- After the recent market correction, CAPL now trades at a 30% discount to RNAV. This is close to 1SD below its 5-year average.
- With over 70% of its assets contributing recurring income, we believe our 15% discount for CAPL remains appropriate.
- Our TP climbs to SGD3.95 from SGD3.85 on our higher RNAV.
- We upgrade it to BUY from HOLD, anticipating stronger earnings from recognition of its strong residential presales in China.
Analyst: Derrick Heng, CFA
Source: http://www.maybank-ke.com.sg/
