CapitaLand

UOBKayhian on 20 Feb 2014

FY14F PE (x): 17.1
FY15F PE (x): 19.2

Results below expectations. CapitaLand reported 2013 net profit of S$850m, down 9%
yoy due to losses related to the divestment of its 20% stake in Australand (S$121m),
higher one-off impairments (S$165m) and repurchase of convertible bonds (S$31m).
Excluding these and revaluations gains of S$488m, the operating PATMI of S$528m is
below our expectations (vs S$596m forecast) mainly due to lower-than-anticipated
recognitions from residential developments in China and Singapore.
Focus shifting away from pure Singapore residential, as property measures weigh on
sentiment and as CapitaLand focuses on selling down residential units in light of
tightening, with unsold residential assets comprising only 10% of total assets. New
S$3.7b in capital commitments in 2013 highlights the shift, with only one Singapore
residential site at Coronation Road accounting for 10% of total committed investment
value, while the largest commitment is the S$1.5b (40%) for the Project Jewel mall at
Changi Airport. Opportunistic divestments (Westgate Tower) and unlocking value in key
holdings (Australand) will enable CapitaLand to recycle capital to focus on key
segments.
Maintain BUY and target price of S$3.83, pegged at 25% discount to our RNAV of
S$5.11/share. The stock is currently trading at a steep 43% discount to its RNAV and is
at an attractive 0.8x P/B.