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She also points out that shareholders can participate in a potential re-rating of CLIM as real estate investment management (REIM) vehicles historically trade at 1.5-2.6 times premiums to NAV. Without a bulky development book, CLIM’s fee and rental revenue from mature investment properties is expected to be more stable.
SEE:CapitaLand's revamp paves way for Singapore developers to follow
Ong’s earnings forecast remains unchanged, pending further details on the scheme of arrangement. Instead, her higher target price is based on an 80%/20% probability-weighted average between an RNAV-based target price and sum-of-the-parts assuming the demerger happens as well as a target price assuming the demerger does not happen. Overall, CapitaLand remains Ong’s top pick for the sector given its high proportion of recurring income, while its pivot to new economy assets are expected to keep earnings stable and future-proof its portfolio. Shares in CapitaLand close 9 cents or 2.43% higher at $3.80 on March 25.