CapitaLand Limited - OCBC Investment 2015-11-05: Rapid clip of Chinese home sales continues

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CAPITALAND LIMITED C31.SI 

CapitaLand Limited: Rapid clip of Chinese home sales continues 

 3Q15 performance healthy 

 YTD Chinese home sales up 97%

 Ascott’s overall REVPAU up 4% 

Healthy set of 3Q15 results within expectations 

• CAPL’s 3Q15 PATMI increased 48% YoY to S$192.7m mainly due to higher contributions from development projects at CapitaLand China and serviced residences at Ascott, project cost savings in Singapore, improved operating performances at CapitaLand Malls Asia and higher revaluation and portfolio gains; but partially offset by lower contributions from development projects in Vietnam. 
• 3Q15 operating PATMI was S$163.0m, up 26% YoY, and we judge this quarter’s results to be within expectations. 
• Despite cautious market sentiments about China, the group continues to report robust residential sales with 3Q15 sales up 129% to 2,422 units. 
• 9M15 home sales now cumulates to 6,492 units – similarly 97% higher than the 3,288 units in 9M14 – and the group reports that it has a steady pipeline for 4Q15 with over 2k units launch-ready. That said, the pace of residential sales in Singapore remains subdued and YTD home sales dipped 36% YoY to 151 units. 
• Given the more favorable mix of units sold, however, YTD sales value only decreased 7% YoY to S$412m. 

Ascott’s overall REVPAU up marginally despite uncertain global outlook 

• Notwithstanding an uncertain global outlook, Ascott’s performance was fairly resilient and 3Q15 overall global REVPAU increased 4% to S$128. The serviced residence business unit currently has about S$410m of assets under development (24% of total asset value by effective stake) which will provide a potential uplift to returns ahead when operational. 
• We like that Ascott continues to efficiently build scale; it has achieved its target of 40k units by 2015 ahead of time and remains on track to double its inventory to 80k units by 2020. 
• At CapitaLand Malls Asia, 9M15 same-mall NPI growth slowed to 1.8% in Singapore due to lackluster retail conditions while the Chinese malls clocked in at 8.8% which remains fairly robust. 
• The group’s balance sheet remains firm; its net gearing dipped marginally to 51% in 3Q15 from 57% as at end FY14. 
• Maintain BUY with an unchanged fair value estimate of S$4.07.

Eli Lee OCBC Securities | http://www.ocbcresearch.com/ 2015-11-05

OCBC Securities SGX Stock Analyst Report BUY Maintain BUY 4.07 Same 4.07