CapitaLand - Maybank Kim Eng 2017-01-17: Bulk sale of The Nassim

CapitaLand (CAPL SP) - Maybank Kim Eng 2017-01-17: Bulk sale of The Nassim CAPITALAND LIMITED C31.SI

CapitaLand (CAPL SP) - Bulk sale of The Nassim


Maintain BUY with unchanged TP of SGD3.46 

  • CapitaLand announced the sale of the remaining 45 units at The Nassim for c.SGD2,300 psf, which is 19% lower than the ASP for the first 10 units sold last year. 
  • While the pricing is not particularly compelling, we believe the avoidance of potential QC penalties from Aug-17 and the ability to recycle capital into new projects with potentially higher returns are key positives. 
  • Furthermore, the decent 3.8cts EPS uplift from this latest transaction will help boost returns in 2017. 
  • Our forecasts remain unchanged pending a full review. 
  • Maintain BUY with unchanged TP of SGD3.46 based on a 33% discount to RNAV of SGD5.13.


Bulk sale of remaining units at The Nassim 

  • CapitaLand announced the sale of Nassim Hill Realty Pte Ltd, the holding company of The Nassim, to Kheng Leong (Not Listed), the private property arm of the Wee Cho Yaw family for SGD411.6m. 
  • The Nassim is a 55 unit high-end condominium project in the prestigious Nassim Hill locale that was redeveloped from the former ANA Hotel. The latest deal assumes a property value of SGD407.2m for the 45 units.


Implied unit price of SGD2,300 psf 

  • According to management, the 45 units sold in this transaction have a combined strata area of 16,446 sqm. This implies a unit price of SGD2,300 psf, which is 19% lower than the average price of SGD2,846 psf for the first 10 units sold last year. 
  • Due to the low carrying value of this project, the latest transaction will lead to a decent earnings accretion of 3.8 SGD cts or c.SGD161m, based on proforma disclosures.


Further de-risked its Singapore residential exposure 

  • The Nassim was completed in Aug-15 and would be due for its first Qualifying Certificate (QC) deadline in Aug-17. Offloading this project ahead of its first QC deadline has allowed the developer to avoid SGD9m of QC penalty for the first year, according to management. 
  • With the latest deal, CapitaLand has further de-risked its exposure to the Singapore residential market with very limited stock left for sale.




Derrick Heng CFA Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-01-17
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 3.460 Same 3.460





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