CapitaLand Ltd - RHB Invest 2017-01-17: Divestment of remaining units in ‘The Nassim’ for a gain of SGD161m

CapitaLand Ltd - RHB Invest 2017-01-17: Divestment of remaining units in ‘The Nassim’ for a gain of SGD161m CAPITALAND LIMITED C31.SI

CapitaLand Ltd - Divestment of remaining units in ‘The Nassim’ for a gain of SGD161m

  • CapitaLand announced that it will divest remaining 45 units (total of 55 units) in the ‘The Nassim’ for aggregate sale price of SGD411.6m. 
  • ‘The Nassim’ is a freehold low-rise luxurious condominium located on the former ANA hotel site, at Nassim Hill (District 10). 
  • The buyer is Kheng Leong Company (Private) Limited, the private real estate arm of Mr Wee Cho Yaw, who is the chairman emeritus of United Overseas Bank (UOB SP, NEUTRAL, TP: SGD18.90).
  • CapitaLand will reap a net gain of SGD161m post completion of the transaction. More importantly CapitaLand will avoid paying Qualifying Certificate (QC) penalties of about SGD55.8m over next three years (assuming none of the remaining units were sold). 
  • The transaction implies a price of SGD2,300 psf for sellable area, which is at 18% discount to average transaction price (SGD2,846 psf) for the initial ten units. 
  • We view the transaction positively as it should help CapitaLand offload some of its high- end inventory in Singapore amidst challenging market conditions. We expect proceeds from this proposed sale to be redeployed into earnings accretive acquisitions across its core markets, with expectations of generating higher ROEs. 
  • We currently have a NEUTRAL recommendation on CapitaLand with a TP of SGD3.15.




Vijay Natarajan RHB Invest | http://www.rhbinvest.com.sg/ 2017-01-17
RHB Invest SGX Stock Analyst Report NEUTRAL Maintain NEUTRAL 3.150 Same 3.150





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