Thursday, September 24, 2009

CapitaLand - Caught in an ebbing tide

We have downgraded our rating for Capitaland to 3 from 2 after the government’s announcement (on 14 September) of measures to ensure a ‘stable and sustainable’ property market, including a surprise (in our view) withdrawal of the Interest Absorption Scheme (IAS). We expect CapitaLand’s shares, a proxy for the Singapore property sector, to be pulled down by the negative sentiment.

We see CapitaLand’s share-price driver as deal flow (capitalproductive announcements, including the possibility of monetising its China-mall assets or a major acquisition) and not the state of the Singapore residential market, although the company is poised to launch The Interlace next month. We have not changed our earnings forecasts.

We have lowered our six-month target price, to S$3.84, based on a reversion to its average premium to NAV (based on our estimates) of 29% over the past five years, from S$4.30 (based previously on one-half standard deviation above the average NAV premium). We have not changed our NAV estimate of S$2.98.

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2 comments:

dogcom said...

Hello, I see only post up to 2009 Sept. Is this blog still running? I find the analysis useful. Thanks

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