“We believe this is a deal to watch as its outcome may have a material stock impact,” says lead analyst Derrick Heng who recalled that the stock suffered a selldown in mid-2015 on concerns that it could overpay for Asia Square Tower 1, but subsequently recovered when it walked away from the deal.
To recap, 1Q17 results were in line at 25% of Maybank’s full-year estimates. The Nassim deal alone contributed $161 million or 42% of the group’s net profit of $387 million.
China contributions were stronger with more units handed over. Home sales of 2,062 units in China were on track vs its 2017 target of 8,000 units.
Contrary to observations of recovering sentiment in Singapore’s residential market, Maybank remains uncertain on the sector’s outlook citing headwinds from property cooling measures.
But its exposure to the local market remains small at just $1.3 billion or 3% of the group’s total assets. 52% of the 124 units at Marine Blue are now sold following its relaunch.
Unbilled sales improved sequentially to more than 6,000 units worth RMB10.5 billion ($2.1 billion). This offers earnings visibility as 60% of the unbilled sales will be recognised over the next three quarters.
“We reiterate our view that CapitaLand is fairly valued after its strong YTD rally,” says lead analyst Derrick Heng, “Maintain ‘hold’. Target price remains unchanged at $3.70, based on a 29% discount to RNAV of $5.18. Key risk may stem from overpaying for acquisitions.”
Shares of CapitaLand are up 5 cents at $3.72.
