SINGAPORE (Sept 27): OCBC Investment Research is keeping CapitaLand at “buy” with an unchanged fair value estimate of S$3.68, after the property developer acquired a US$51.9 million (RM213.3 million) site in Ho Chi Minh City.

Wholly-owned subsidiary CapitaLand (Vietnam) Holdings will hold a 100% stake in the 0.5ha site, which is CapitaLand’s third acquisition in Vietnam within 14 months.

Slated to be launched in 4Q2016 and completed in 2018, the project will have an estimated gross development value of S$143 million (RM432.7 million).

CapitaLand “remain[s] confident about Vietnam’s economic outlook,” says OCBC lead analyst Eli Lee in a Tuesday report.

“Residential sales in the country were strong in 1H2016 with about 460 units sold (worth about S$80 million), which translates to a 20% y-o-y growth in terms of sales values and volume,” Lee adds.

According to Lee, CapitaLand was one of the top performing foreign developers in Vietnam last year, with 1,321 homes sold at a value of S$226.5 million.

“We like that this project will deepen the group’s exposure to the growing Vietnamese market,” Lee says. “In particular, the serviced residences component will generate incremental recurring income from a market with strong demand, as evidenced by the 94% occupancy rate at Somerset Vista Ho Chi Minh City.”

As at 11.55 a.m., CapitaLand is trading 1.3% higher at S$3.19. — theedgemarkets.com.sg

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This article first appeared in The Edge Financial Daily, on Sept 27, 2016. Subscribe to The Edge Financial Daily here.

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