CapitaLand continues to deliver balanced results in an uncertain environment

SINGAPORE (March 30): OCBC Investment Research is maintaining its “buy” call on CapitaLand Ltd, raising its fair value estimate on the stock from S$3.68 to S$3.93 after recent news broke on the group’s developments in Vietnam and Singapore.

In a Thursday note, analyst Eli Lee says he is optimistic on the property development’s business prospects in Vietnam after the CEO of CapitaLand announced that the group plans to acquire more sites in Vietnam for residential development, and will continue to seek investment opportunities in offices, serviced residences and integrated developments.

“Vietnam is currently CapitaLand’s third largest market, with S$2.1 billion (RM6.65 billion) of gross assets under management, including 22 serviced residences, nine residential developments and a prime commercial property, and the group sold 1,480 homes in FY2016, up 12% y-o-y. The group also indicated that there could be potential for a Raffles City development in Ho Chih Minh City,” notes Lee.

Another positive development highlighted by Lee is the group’s appointment to manage the retail mall at the new SingPost Centre, which is due to open together with SingPost’s General Post Office beside the Paya Lebar MRT interchange station in 2H2017.

The analyst sees this as a move to widen the group’s retail network as well as further strengthen its leading position as the largest mall operator in Singapore.

“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,” says Lee.

As at 2:50pm, shares of CapitaLand are trading 1.1% lower at S$3.64. —

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