■ 3Q15 net income in line, with 9M15 at 80% of FY15F. Weak Singapore sales were offset by strong China showing. Malls & serviced residences also improved.
■ Ceased negotiations to buy Asia Square Tower 1. Positive as market was wary of CAPL increasing office exposure amid oversupply.
■ Maintain BUY with TP lowered to SGD3.88 from SGD3.95 after updating RNAV, still based on 15% discount to RNAV.
3Q15 in line, strong China performance
3Q15 net income of SGD193m (+48% YoY) met expectations, with 9M15 at 80% of our FY15F. Residential sales in Singapore were weak. CAPL sold just 45 units worth SGD109m. 9M15 total home sales fell 36% YoY. CAPL flagged that its exposure to Singapore’s difficult residential market is low at <7.3% of assets. Relief came from strong China sales, with 2,422 homes worth CNY3.8b sold vs 3Q14’s 1,057 units for CNY1.6b. Mall metrics were also decent, with 9M15 same-mall NPI growth of 1.8% in Singapore and 8.8% in China. Ascott’s 3Q15 RevPAU was up 4% YoY to SGD128.
No longer buying Asia Square
CAPL also announced that it has ceased negotiations to scoop up a stake in Asia Square Tower 1. As some investors were wary of CAPL increasing its office exposure at the peak of the cycle, this news could lift sentiment, in our opinion.
We adjust our FY15-17 EPS by -2%/+7%/+3% after changing the timing of our sales forecasts. Our TP also dips by 1.7% to SGD3.88 to reflect our updated RNAV of SGD4.56, from SGD4.64. Our TP remains based on a 15% discount to RNAV. Maintain BUY. (Read Report)
Read Related Reports
1) CapitaLand - Towards An Optimal Mix by DBS Group Research, published on 5 November 2015
2) CapitaLand Limited - Rapid clip of Chinese home sales continues by OCBC Investment Research, published on 5 November 2015
3) CapitaLand - Buy: Cheap on valuation grounds by HSBC Global Research, published on 4 November 2015
4) CapitaLand - Benefits of a nimbler real estate value chain by Macquarie Research, published on 4 November 2015
Source : Maybank Kim Eng Research