CapitaLand - CIMB Research 2017-04-26: Boosted by The Nassim

CapitaLand - CIMB Research 2017-04-26: Boosted by The Nassim CAPITALAND LIMITED C31.SI

CapitaLand - Boosted by The Nassim

  • As expected, CAPL’s 1Q17 was strong with net profit of S$386.8m at 37% of our FY17 forecast.
  • 1Q17 earnings driven by profits from sale of The Nassim, new Japan contributions and better performance in China.
  • Strong locked-in China sales of Rmb10.5bn provide earnings visibility.
  • Leasing income to grow steadily with new properties coming onstream.
  • Maintain Add with unchanged TP of S$4.19. 

Strong 1Q from Singapore residential 

  • CAPL reported a 77% jump in net profit to S$386.8m, thanks to gains from the sale of The Nassim, contributions from recently acquired Japan office and retail portfolio, and better performance from China residential and malls operations. 
  • Excluding one-offs, core net profit would have been S$337.8m, more than double from a year ago. 
  • EBITDA margin improved to 29.3% on the back of lower cost from China projects in 1Q17.

Good sell-through rate from ongoing projects 

  • The group sold S$497m worth of residences in Singapore in 1Q17, including Cairnhill Nine, d’Leedon, Sky Vue and The Interlace. 
  • Recent launch of Marine Bleu brought take up to c.52%. The group has a remaining 368 units of unsold inventory in Singapore and management indicated it will continue to selectively source for new sites to restock its residential pipeline.

China residential sales continue to be well received 

  • In China, it handed over Rmb2.9bn of residential units over in 1Q from Dolce Vita, Vista Garden and Riverfront Hangzhou. With an additional Rmb3.8bn worth of sales in 1Q, the group has c.Rmb10.5bn of locked-in sales to be recognised when the projects are completed. 
  • It expects to hand over 60% of this over the next nine months with another 7,000 launch-ready units on hand.

Retail and serviced apartment portfolio growing steadily 

  • Operating metrics for its malls continued to hold up well with same-mall shopper traffic and tenant sales up 0.5-12.8% and 0.9-17.9%, respectively, across its geographic footprint. Four new malls, CM Westgate, RC Changning, RC Hangzhou and RC Shenzhen, are scheduled to open in 2Q17. 
  • The retail portions of Raffles City are already well pre-committed. Earnings uplift to impact largely from FY18 due to initial start-up expenses. 
  • Another 2,600 serviced residence units are scheduled to open in 2017. 

Maintain Add 

  • We leave our FY17-19 EPS estimates unchanged. 
  • Our target price of S$4.19 is pegged to a 20% discount to RNAV of S$5.23. 
  • Continual reinvestment into new RNAV-accretive projects is a key potential re-rating catalyst. 
  • Downside risks to our call include slower-than-expected deployment of capital.

LOCK Mun Yee CIMB Research | Yeo Zhi Bin CIMB Research | http://research.itradecimb.com/ 2017-04-26
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 4.190 Same 4.190