Following CapitaLand’s strong performance in 1Q, DBS lead analyst Derek Tan believes 2017 could be “a banner year for the group”.
“The group’s various business units are expected to deliver strongly in 2017,” says Tan in a Thursday report. “We are seeing an improvement across business divisions.”
CapitaLand on Wednesday posted 1Q earnings of $386.8 million, a 77.2% increase compared to a year ago.
Group revenue held steady at $897.5 million, but EBIT grew 35% to $618.6 million while operating PATMI for the period increased by 121.1% to $337.8 million.
The robust set of results were driven mainly by the sale of The Nassim and higher portfolio gains.
(See: CapitaLand posts 77% rise in 1Q earnings at $387 mil on better operating performance)
“[CapitaLand] will see higher valuations on the back of improved property market sentiment, which will translate into strong sales,” says Tan.
With the brighter outlook for residential sales in Singapore, Vietnam and China, Tan believes CapitaLand should become “more aggressive” in replenishing its land bank in these countries.
According to Tan, CapitaLand’s management is exploring opportunities to acquire land at a cheaper entry price through joint ventures or mergers & acquisitions.
“The group remains keen to build on its recurring income base and we could see acquisitions in that space,” says Tan. “In addition, opportunistic asset recycling of mature assets into its listed REITs/funds, or any M&A activities, present re-rating opportunities going forward.”
As at 12.59pm, shares of CapitaLand are trading 2 cents higher at $3.74.
