China and Vietnam to drive growth for CapitaLand

SINGAPORE (Dec 1): CIMB is maintaining its “add” recommendation and target price of S$4.17 on CapitaLand after observing healthy demand at the group’s projects in Guangzhou, Shenzhen and Vietnam.

CIMB’s analyst Lock Mun Yee noted that the group has been successful in ramping up its property launches, ahead of new housing restrictions that are expected to be implemented in 4QFY16. To date, the group has secured RMB14 billion (S$2.9 billion or RM9.07 billion) of sales, and 40% of that will be recognised as early as 4QFY16.

Looking ahead, the group also has an urban renewal project in the pipeline, known as the Datansha Island project, which will have 2 million sf of gross floor area.

In addition, the group plans to speed up its property launches in Vietnam by utilising its US$500 million (S$716 million or RM2.23 billion) commercial fund acquiring sufficient landbank to develop between 2,000 and 2,500 homes as well as a couple of commercial sites.

CapitaLand also reiterated its continued focus on adopting an asset-light strategy and growing the assets under management of its investment management business.

“In addition to plans to expand ROE by adopting an asset-lighter business model and expand investment management fees, core net profit would be boosted by the completion of eight malls in 2017,” writes Lock in a note on Thursday. “Once their earnings contribution stabilises, we anticipate group ROE to improve with higher recurrent income from these assets, post impact of pre-opening expenses.”

Shares of CapitaLand are trading 2 Singaporean cents higher at S$3.10 on Thursday. — theedgemarkets.com.sg