Before CapitaLand Investments’ (CLI) listing on the Singapore Exchange on Sept 20, UOB Kay Hian analyst Adrian Loh has estimated a target price of $3.64 for the group.
See: CapitaLand Investment makes debut on SGX; appoints CEOs to grow PE fund business
The target price was based on a sum-of-the-parts (SOTP) valuation, Loh writes in a Sept 17 report.
“Our SOTP for CLI uses global comparable companies for the investment management and lodging segments. For the investment management segment, the comparables include Charter Hall, Goodman Group, Stockland, Mirvac, Home Consortium, Lendlease, ESR Cayman, Brookfield and Blackstone while lodging comps include Marriott, Hilton, Hyatt, Wyndham, Choice, Accor and Whitbread,” says Loh.
“Our valuation for CLI’s listed REITs use a combination of UOB Kay Hian target prices and market prices, while the valuation for the company’s property investment segment and unlisted funds utilises adjusted revised net asset value (RNAV) and carrying value respectively as at end-1QFY2021,” he adds.
The target price also implies a 29% upside from CapitaLand’s valuation of $2.823 on CLI as part of the consideration in its scheme of arrangement.
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Shares in CLI closed flat at $2.95 on its first day of listing on Sept 20.
“We like CLI for its scalability through fee-related earnings and growth potential in its funds management business,” writes Loh.
“Within the investment management segment, our FY2022 price-to-earnings (P/E) multiple of 18.4 times is a slight premium over the 17.9 times average in 2019 (ie pre-Covid-19); while for the lodging management segment, our FY2022 EV/EBITDA multiple of 13.5 times is a 25% discount to the 17.9 times sector average seen in 2019,” he adds.
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Meanwhile, Loh has kept “market weight” on the Singapore property sector on the whole with “buy” calls for City Developments Limited (CDL), Ho Bee Land, Wing Tai and Oxley Holdings.
He has given the counters target prices of $8.50, $3.32, $2.04 and 28 cents respectively.
Loh has also kept “hold” on Propnex with a target price of $2.09.
On CDL’s divestment of Sincere on Sept 10, Loh estimates that CDL’s loan exposure to Sincere has declined by $30 million - $35 million to $82 million - $87 million after receiving the 15.4% stake in Shenzhen Tusincere Technology Park (STTP) as partial payment.
Photo: CLI
