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Experts from CIMB, RHB and DBS are urging investors to purchase shares in CapitaLand after the company recently disposed 20 shopping malls in China for a net gain of $75 million, reported the Business Times.
Last Friday, CIMB analyst Lock Mun Yee initiated a buy call on the Singapore-listed property firm. The company reckons that the divestment will improve CapitaLand’s capability to seize growth opportunities in China.
“Income vacuum from the sale of the properties would be more than offset by the growing income contribution from its one million sq m of new retail GFA (gross floor area) completed in 2017.”
“More importantly, it has unlocked value from mature assets for reinvestment into new growth opportunities,” said CIMB.
Then on Monday (8 January), analysts at RHB Research Institute Singapore and DBS Group Research released the same advice as CIMB.
In particular, RHB raised its target price for CapitaLand from $3.90 to $4.20. CIMB kept its target price at $4.25, while DBS was the most bullish with a target price of $4.35.
DBS Analysts Derek Tan and Rachel Tan explained that their fair-value target price of $4.35 “is achievable, given expectations that the group will deliver a robust set of results on the back of strong revaluation gains for its commercial portfolio, and locked-in sales for its residential portfolio”.
“Strategy-wise, it appears that CapitaLand has chosen to stay out of the current euphoria in the Singapore residential market and focus on investing in its core competencies and recycling its portfolio assets,” they explained.
RHB analyst Vijay Natarajan said that CapitaLand appears to exercise prudence when it comes to bidding for state land or en bloc sites. But he expects the company could potentially acquire one or two land parcels this year.
“While we note that its landbank is running low, we believe its prudent approach makes sense amidst the current intense competition, which has driven up land costs by 20 percent to 40 percent,” Vijay added.
This article was edited by Keshia Faculin.
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