Maybank Kim Eng 2015-08-05: Capitaland - 2Q15 Results. Attractive Valuations; U/G to BUY.

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/


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