CapitaLand - Maybank Kim Eng 2016-02-18: Strong China home sales the highlight

CapitaLand - Maybank Kim Eng 2016-02-18: Strong China home sales the highlight CAPITALAND LIMITED C31.SI 

CapitaLand (CAPL SP) - Strong China home sales the highlight 

Maintain BUY and SGD3.71 TP 

  • CapitaLand reported 4Q15 results that were inline. 
  • We reiterate our view that the group is likely to achieve its ROE target in 2017 on the back of recognition of pre-sold homes and fair value gains on the completion of key Raffles City projects. 
  • We retain our BUY rating and RNAV-based TP of SGD3.71 pending full model update. 
  • Our RNAV of SGD4.77 incorporates TPs for its listed REITs and market value for units not covered. 

FY15 inline; ROE 6.1% 

  • CapitaLand’s FY15 net income of SGD1,066m is broadly inline at 95% of our SGD1,118m estimate. 
  • We attribute the slight variance to impairments and provisions made in 4Q15. 
  • The company achieved ROE of 6.1% for the year and maintained its 9.0 SGD cts DPS. 

Singapore: Residential headwinds persist 

  • Residential sales in Singapore remained sluggish with 244 homes worth SGD559m (FY14: 278 homes worth SGD561m) sold. 
  • Management continues to look out for headwinds from property-cooling measures. 
  • For its malls in Singapore, we also noticed further weakness at Star Vista that led to a 9.8% decline in valuation to SGD276m from Jun 2015. 
  • CL Singapore took project-specific impairment of SGD110m for the year. 

China: Strong home sales momentum 

  • The surge in China residential sales was a key highlight with a record 9,402 homes worth CNY15.2b sold in the year (FY14: 4,961 homes worth CNY7.6b). 
  • Going forward, management aims to maintain current sales level with government policies remaining favourable. 
  • We believe the targeted completion of over 9,000 homes will drive earnings in the year ahead. 
  • CL China took an impairment charge of SGD71m for continued weakness at Tianjin. 
  • There was slight weakness in the Raffles City Portfolio with RC Beijing and RC Ningbo reporting 1.2% and 1.5% decline in NPI respectively for FY15.

Derrick Heng CFA Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2016-02-18
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 3.71 Same 3.71