CAPITALAND LIMITED
C31.SI
Capitaland - The Great Home Sale Of China
- 3Q15 results were in line with our estimates.
- Maintain BUY and RNAV-derived SGD4.22 TP (35% upside).
- China residential sales remained robust as CapitaLand sold c.2x more units than a year before.
- In addition, we like that it has ceased negotiations over its acquisition of Asia Square Tower 1.
- At a 44.7% discount to RNAV, we think valuations are still undemanding at this level.
Results in line.
- CapitaLand registered 3Q15/9M15 operating PATMI of SGD163.0m/SGD574.3m respectively. This translated to a growth of 36.2% (3Q15) and 14.2% (9M15) YoY, underpinned by the performance across all of its business units.
- Likewise, 3Q15 revenue and EBIT were up c.17% and c.31% YoY respectively. This was mainly driven by the higher number of units handed over to home buyers.
- There was also the increased contributions from development projects in China, namely Dolce Vita and The Paragon.
- CapitaLand’s balance sheet remains robust, with net gearing ratio standing at 0.51.
Stellar residential sales in China.
- China’s residential market proved to be robust as CapitaLand received c.2x more residential sales in the East Asian nation vis-à-vis a year ago. The company sold 2,422 residential units vs 1,057 units a year ago. This represents sales volumes of CNY3,750m and CNY1,594m respectively. Sales were mostly from Summit Era in Ningbo, Vermont Hills in Beijing, and One iPark in Shenzhen.
- In Singapore, meanwhile, the residential market has remained challenging, given that CapitaLand sold 45 units in 3Q15, accumulating to 237 units YTD. This equates to a decline of c.36% YoY.
Acquisition for Asia Square Tower 1 has been called off.
- CapitaLand has also announced that it has ceased negotiations with regards to the acquisition of Asia Square Tower 1. The cessation of this acquisition is a good signal to shareholders, as the reported price tag of SGD3.5bn- 4.2bn was lofty, in our opinion.
Maintain BUY with an unchanged TP of SGD4.22.
- We think that the counter remains compelling as it is trading at a 44.7% discount to its RNAV.
- In addition, we are confident of its “One CapitaLand” strategy – with a single listed developer integrated across asset classes, delivering a sustainable ROE of 8-12%.
- Maintain BUY with TP of SGD4.22.
Ong Kian Lin
RHB Research
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Ivan Looi
RHB Research
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http://www.rhbinvest.com.sg/
2015-11-04
RHB Research
SGX Stock
Analyst Report
4.22
Same
4.22
