CapitaLand Limited - OCBC Investment 2016-09-27: Acquires US$52m site in Vietnam

CapitaLand Limited - OCBC Investment 2016-09-27: Acquires US$52m site in Vietnam CAPITALAND LIMITED C31.SI

CapitaLand Limited - Acquires US$52m site in Vietnam

  • Acquires US$51.9m prime site in Vietnam.
  • Mixed development with homes and serviced residence.
  • Positive on Vietnam outlook.

Acquires land site for US$51.9m in Ho Chi Minh City, Vietnam 

  • CapitaLand announced that it has acquired for US$51.9m (~S$70m) a 0.5 hectare prime site in Ho Chi Minh City, Vietnam located in Cau Kho ward of District 1 which is accessible to the downtown via the Vo Van Kiet Highway by a five- minute drive. 
  • The site is expected to be developed into a project with a 17-storey residential tower and a 22-storey serviced residence tower. 
  • Slated to be launched in 4Q2016 and completed in 2018, the project will have an estimated gross development value of US$106m (S$143m). 
  • The serviced residence component comprises 200 units and will be managed by the group’s serviced residence arm, The Ascott Limited, under its Somerset brand. In addition, the residential component will consist of 102 units and facilities such as a swimming pool, gym and a clubhouse.

Confident about Vietnam’s economic outlook 

  • Management indicates that they remain confident about Vietnam’s economic outlook and that residential sales in the country were strong in 1H2016 with about 460 units sold (worth about S$80m), which translates to a 20% YoY growth in terms of sales values and volume. 
  • The group was also one of the top performing foreign developers in Vietnam last year with 1,321 homes sold at a value of S$226.5m. 
  • We like that this project will deepen the group’s exposure to the growing Vietnamese market and note that this is CapitaLand’s third acquisition in the country since June 2015. 
  • In particular, the serviced residences component will generate incremental recurring income from a market with strong demand, as evidenced by the 94% occupancy rate at Somerset Vista Ho Chi Minh City. 
  • Looking ahead, we believe that management will focus on opportunities in offices, serviced residences and integrated developments. 
  • Maintain BUY with an unchanged fair value estimate of S$3.68.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2016-09-27
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 3.680 Same 3.680