SINGAPORE (Nov 25): DBS is maintaining its “buy” call on developer CapitaLand with a $3.60 target price.

In a Friday report, lead analyst Rachel Tan says the stock offers good value, trading at an attractive 0.7x P/BV and 0.6x P/RNAV.

In addition, Tan likes the group’s strategy of growing its commercial portfolio as it raises earnings visibility while the opportunistic recycling of mature assets into its REITs and funds provides upside potential to its earnings estimates.

CapitaLand’s property portfolio has 75% of assets in retail malls and commercial integrated developments, including the Ascott Group, which offers strong income visibility in the medium term.

The operating performance of its malls will also improve as the properties reach maturity, boosted by the completion of four Raffles City mega developments in China in the medium term.

Tan recently visited CapitaLand’s properties in Guangzhou, Shenzhen and Vietnam.

In China, Tan says CapitaMall SKY+ has hit an occupancy of 91% vs 79% in Dec 2015 when it first opened while the Datansha project is expected to launch its residential properties by mid-2017. And although Raffles City Shenzhen is not on track to open in 2017, the other four Raffles City China developments are slated to open progressively from 2017-2019.

Meanwhile, Vietnam has shown strong sales, recording 60-80% take-up rates in recent property launches. Management also plans to launch a US$0.5 billion ($0.7 billion) commercial fund by 2017 to seed commercial properties.

Shares of CapitaLand are up 3 cents at $3.04