SINGAPORE (Aug 3): Maybank Kim Eng Research is keeping its “hold” call on CapitaLand with an unchanged price target of $3.75 after the real estate group this morning posted its set of financial results for 2Q17, which was overall in line with the research house’s expectations.
See: CapitaLand 2Q earnings double to $579.3 mil on better operating performance
In a Thursday report, analyst Derrick Heng notes that the group’s earnings continue to be driven by an active portfolio reconstitution and fair value gains, having reported what he deems a solid 89% increase in headline net profit for the first half of 2017.
He particularly believes that the group’s strong China performance continues to be the pillar of strength for the group, with residential sales and operating statistics at the malls for the country outperforming those of the Singapore properties.
Heng also points out that tenant sales and net property income (NPI) growth for malls in China outperformed Singapore’s at 6.2% and 6.8% respectively on a same-mall basis, compared to flat numbers in Singapore.
Overall, return on equity (ROE) for the first half of the year stands at 5.5% and is on track to meet its target of 8% this year, he adds.
After years of de-risking its Singapore residential exposure, CapitaLand’s management has recently expressed its intention to be more aggressive in acquiring land in its home market.
“Nonetheless, with just $1 billion worth of inventory or a mere 2% of total assets exposed to this market, we believe CapitaLand is not a proxy to an impending home price rebound,” concludes the analyst.
As at 1.49pm, shares of CapitaLand are trading 3 cents lower at $3.73.
