“I must stress we do not want to grow AUM for AUM’s sake. We are not, out of the blue, going to go into new asset classes where we have no inherent abilities,” says Lee Chee Koon, group CEO of CapitaLand, and CEO-designate of CapitaLand Investment (CLI). That is likely to differentiate CLI from other real estate investment managers (REIMs) including homegrown ARA Asset Management.
At any rate, with $10 billion of property, and the ability to recycle these assets, to form partnerships with Capitaland Development, other capital partners to acquire and develop property, and with a renminbi fund management licence, CLI has a lot of optionality for growth. Following details of how CLI plans to enhance shareholder value through this thoughtful growth, and without collecting AUM needlessly, CapitaLand’s share price is at a new decade high ending above $4 on July 22.
What should investors do? The decision should be easy. Hang on for the 95 cents in cash, and keep the CLI shares for the time being. There could be an issue with odd lots of CapitaLand Integrated Commercial Trust (CICT) units, and CICT may come under a little bit of pressure should investors not interested in yield plays decide to divest of these units. Traders may decide to bail out given the mildly overbought readings of CapitaLand. Its EGM is on Aug 10 and prices may stay resilient ahead of this date.
On the other hand, City Developments’ (CDL) share price is hovering around eight month lows, despite its oversold condition, and a minor positive divergence. The positive divergence suggests that a rebound is likely, imminent almost, but the timing is likely to test traders who may not be able to hold positions for more than a few days. Resistance for the rebound appears at the breakdown level of $7.10 to $7.20.
Analysts continue to retain their buy calls for CDL, and may wait till after its 1HFY2021 ended June results before they review their recommendations. For traders, this would be too late. For long-term investors, analysts’ recommendations may be modestly useful.
Elsewhere, Dasin Retail Trust announced that Sino-Ocean Capital is likely to acquire a 70% stake in its trustee-manager, with a call option to acquire units in the trust that could take its stake to as high as 26%. Sino-Ocean’s backing has helped the trustee-manager to refinance some of Dasin’s loans that were due on July 18, pushing maturity out to the end of the year. If the call option materialises and Sino-Ocean becomes the owner of the trustee-manager and sponsor to Dasin, then the trust is undervalued. But as it stands, it is still early days. The sales and purchase agreement needs to be consummated. Dasin is trading at 54 cents, at a price to NAV of 0.38 times.
Despite some concerns and negativity on the economic and fundamental outlook, the Straits Times Index continues to hold above its 50- and 100-day moving averages which are at 3,141 and 3,138 respectively. The chart pattern and the stance of the moving averages signify strength. Quarterly momentum appears a trifle uncertain. We should go with the chart pattern, which shows an upward bias. The breakout level is at 3,178. As a guide, support has been established at 3,092
