CapitaLand - RHB Invest 2017-06-07: Potential To Double Japan AUM To SGD5bn

CapitaLand - RHB Invest 2017-06-07: Potential To Double Japan AUM To SGD5bn CAPITALAND LIMITED C31.SI

CapitaLand - Potential To Double Japan AUM To SGD5bn

  • CapitaLand sees potential to double its Japan assets under management (AUM) to SGD5bn from current AUM of over SGD2.5bn as at 1Q17. CapitaLand also announced that its on track to achieve at least SGD3bn worth of AUM in Japan by the end of 2017. 
  • Japan is expected to feature prominently in the Group’s recurring income strategy, with a robust portfolio of income- producing shopping malls, serviced residences and offices. 
  • Currently, CapitaLand's Japan recurring income portfolio currently comprise of five shopping malls, four office buildings as well as 23 serviced residences and rental apartment properties.
  • The announcement is in-line with CapitaLand's strategy of strengthening its recurring income base which accounted for ~77% of its total income in 1Q17. The move comes closely on the heels of CapitaLand's recent acquisition (Feb 2017) of four income-producing office and retail properties in Greater Tokyo Area for JPY49.7bn (SGD620.1m). 
  • With the recent acquisitions Japan market accounts for ~3% of CapitaLand's total AUM with China and Singapore being the core markets accounting for 44% and 35% of its total assets.
  • We currently have a Neutral recommendation with TP of SGD3.84. 
  • Key catalyst ahead are big M&A transactions and setting up of more private funds that can boost ROEs. 
  • Downside risks to the share price is a potential slow- down in residential sales from tightening of residential policy measures across various Chinese cities.

Vijay Natarajan RHB Invest | http://www.rhbinvest.com.sg/ 2017-06-07
RHB Invest SGX Stock Analyst Report NEUTRAL Maintain NEUTRAL 3.840 Same 3.840