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Kim Eng Securities began coverage of Singapore’s CapitaMalls Asia which develops shopping malls, with a buy rating and set a target price of $1.92.
By 10:40 a.m., CapitaMalls Asia shares were up 1.8% at $1.42 and have gained about 26% so far this year.
CapitaMalls’ shares have fallen 34% from its initial public offering price of $2.12, said Kim Eng, highlighting that its poor performance was due to its exposure to China and the lack of significant income streams from the country.
However, the brokerage said it believes CapitaMalls has the expertise to succeed in China over the medium to long term, and estimates that core earnings contributions from the country will grow to 54% in 2016, from 7% in 2010.
Kim Eng said it expects CapitaMalls Asia’s earnings to grow by 18% on average each year over the next five years as income from its shopping malls start to stabilise.
