CapitaLand Limited - OCBC Investment 2017-03-30: To deepen presence in Vietnam

CapitaLand Limited - OCBC Investment 2017-03-30: To deepen presence in Vietnam CAPITALAND LIMITED C31.SI

CapitaLand Limited - To deepen presence in Vietnam

  • To seek VN investments.
  • Mgmt contract for SingPost Centre.
  • Raising FV to S$3.93.

Optimistic on business prospects in Vietnam 

  • After meeting with representatives from the government of Vietnam recently, including the Prime Minister, the CEO of CapitaLand announced that the group plans to acquire more sites in Vietnam for residential development (2.0k-2.5k homes) and will continue to seek investment opportunities in offices, serviced residences and integrated developments.
  • Vietnam is currently CapitaLand’s third largest market, with S$2.1b of gross assets under management, including 22 serviced residences, nine residential developments and a prime commercial property, and the group sold 1480 homes in FY16, up 12% YoY. 
  • The group also indicated that there could be potential for a Raffles City development in Ho Chih Minh City.

To manage new SingPost Centre 

  • CapitaLand also announced that it has signed a Property Management Agreement to manage the retail mall at the new SingPost Centre, which has five floors and an NLA of 16.4k sqm. Tenants that have signed up at the centre include NTUC FairPrice, Golden Village, Kopitiam and other leading retail brands. The centre is located beside the Paya Lebar MRT interchange station and will also house the new General Post Office. Both the retail mall and General Post Office will be open for operations in 2H17. 
  • We see this as a positive development which will widen the group’s retail network and further strengthen its leading position as the largest mall operator in Singapore.

Maintain BUY with higher S$3.93 FV 

  • We like the fact that the company continues to deliver balanced results in an uncertain environment due to its diversified asset portfolio and robust recurring income streams. 
  • After the recent set of property curb reversals in Singapore and healthy data-points for home sales in key markets China and Vietnam, we update our model with firmer assumptions, and our fair value estimate increases from S$3.68 to S$3.93. 
  • Maintain BUY.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2017-03-30
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 3.93 Up 3.680