CapitaLand

UOBKayhian on 15 Dec 2014

FY14F PE (x): 20.4
FY15F PE (x): 18.0
CapitaLand is trading at an attractive 36% discount to our RNAV, which is 1SD below its
historical trading discount of 11%. Reversion to the long-term trading discount of 11%
implies a 38% upside.
Site visits resonate “One CapitaLand” strategy. We visited some of CapitaLand's
residential, retail, serviced residences and mixed development projects in Shanghai and
Chengdu. CapitaLand staff from ground up to senior management level reflected the
leveraging on the “One CapitaLand” strategy. Management is planning a Raffles City
portfolio listing (potentially in 2016). CapitaLand’s edge in managing retail malls and its
malls’ appeal to younger generation was evident though there seemed to be ample retail
mall choices. The standoff between developers and homebuyers has started to ease on
the residential segment with a slight pick-up seen in the potential homebuyers visiting
showflats. CapitaLand is on track to deliver ROE target of 8-12% in the next 3-5 years.
The streamlining of operations post CMA’s privatisation would help to enhance
CapitaLand’s competitive strengths in integrated developments, and thus narrow the
holding company discounts.
Maintain BUY and target price of S$4.08, pegged at a 20% discount to our RNAV of
S$5.11/share. The stock is currently trading at a deep 36% discount to our RNAV, which
is 1SD below its historical trading discount of 11%.