SINGAPORE (Feb 15): Credit Suisse is maintaining its “neutral” call on CapitaLand with a target price of $3.90, despite consensus giving the group a “buy” rating.
See: CapitaLand making a Singapore comeback with Pearl Bank acquisition
CapitaLand on Tuesday announced that its 4Q17 earnings dropped 37.8% to $267.7 million, which brought FY17 earnings to 1.55 billion, up 30.3% y-o-y, the highest since FY2008.
Revenue for the quarter declined by 34.6% to $1.21 billion, mainly due to lower handover of units for development in China.
EBIT from Singapore and China was $285.5 million and $380.7 million respectively.
The group proposed a final dividend of 12 cents per share for FY17.
Separately, the group also announced that it has acquired Pearl Bank Apartments (PBA) for $728 million.
See: CapitaLand reports 37.8% fall in 4Q earnings to $267.7 mil; acquires Pearl Bank Apartments for $728 mil
The results came in-line with the research house’s expectations
Separate from the group’s results, it also announced the acquisition of PBA in Outram Park, with a premium of $201.4 million to top-up the land lease to 99 years, which translates to $1,515 psf ppr.
In a Wednesday report, analyst Louis Chia says, “We estimate a breakeven of $2,100 psf for the project.”
In China, less units were sold and sales value declined. But the group has 6,243 units which are launch-ready in China, while RMB10.3 billion ($2.14 billion) of sales is expected to be recognised in FY18.
During 2017, CapitaLand recoded an ROE of 8.5%. And to sustain higher ROEs, the group’s management has announced new targets which include recycling $3 billion of investment properties annually which will likely be driven by assets in China and Singapore; $100 billion AUM by 2020 compared to $88.8 billion today.
The analyst expects the increase to come from key geographies such as China, Singapore, Japan, Europe, US and Australia.
The group’s management also noted that Ascott’s new units once stabilised will add another $60-70 million of fee income.
As at 11.40am, shares in CapitaLand are trading 3 cents higher at $3.56 or 15.4 times FY18 book with a dividend yield of 3.4%.
