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Author: kimeng   |   Latest post: Tue, 14 Nov 2017, 10:26 AM

 

CapitaLand Limited: Fine Tuning Its Chinese Asset Portfolio

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  • Acquires Chinese serviced services
  • Trades office assets in Shanghai
  • Maintain BUY

Transactions in Chinese Serviced Residences and Office Assets

CAPL recently announced that it will acquire, based on an agreed aggregate value of US$56.9m (S$78.8m), two serviced residences assets in Chongqing and Chengdu, China. In Shanghai, the group also reported that it has agreed to buy for RMB2.64b (S$535m) Guozheng Center, a newly completed office development, while divesting Innvo Tower for RMB1.56b (S$316m). The Innov Tower sale is expected to result in net profits of S$85m.

Continues to Actively Scale Up Serviced Residences Portfolio

We like that the group continues to scale up its serviced residences business segment while actively reconstituting its portfolio. In 2017, we expect about 2.6k serviced residences units to be opened and note that CAPL secured new management contracts to manage six properties in China over 1Q17, which added over 1.2k units to its serviced residences portfolio. The group also divested serviced residences properties in Germany to Ascott REIT which was approved earlier this year.

Favorable Trade in Shanghai Office Assets

We see the set of transactions of office assets in Shanghai as favorable. The group will realize value from Innov Tower, a relatively stabilized asset, at RMB38.5k psm which will result in a respectable gain while recycling the capital into the newer Guozheng Tower, completed in 4Q16 and located in the strategic Wujiachang district in the northern part of Shanghai, at an attractive valuation of RMB32.7k psm.

CAPL is gaining exposure to Guozheng Tower at an attractive entry yield and we understand that one of the three office towers, with 18k sqm of GFA, has already been fully leased with active interest in place for the remaining space. On completion of both office transactions, the group will have a sizeable portfolio of over 1.7m sqm of GFA under management across 17 commercial assets in Shanghai.

Maintain BUY with an unchanged fair value estimate of S$4.07.

Source: OCBC Research - 6 Jun 2017

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Labels: CapitaLand

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Chart Stock Name Last Change Volume 
CapitaLand 3.53 0.00 (0.00%) 8,702,900 

Market Buzz

Date Type Subject
16-Nov-2017 Announcement Change - Change in Corporate Information::Striking-off of dormant wholly owned subsidiaries
16-Nov-2017 Announcement Asset Acquisitions and Disposals
15-Nov-2017 Announcement General Announcement::Ascott Residence Trust - Morgan Stanley 16th Annual Asia Pacific Summit (16 November 2017)
15-Nov-2017 Announcement General Announcement::CapitaLand Commercial Trust - "Morgan Stanley 16th Annual Asia Pacific Summit (16 November 2017)"
15-Nov-2017 Announcement General Announcement::Morgan Stanley 16th Annual Asia Pacific Summit (16 November 2017)
14-Nov-2017 Announcement General Announcement
14-Nov-2017 Announcement General Announcement::CapitaLand Mall Trust - "Morgan Stanley 16th Annual Asia Pacific Summit (15 November 2017)"
14-Nov-2017 Announcement General Announcement::CapitaLand Investor Day 2017 - Presentation by Mr Lim Ming Yan, President & Group CEO
14-Nov-2017 Announcement General Announcement::CapitaLand Investor Day 2017 - Presentation by Mr Andrew Lim, Group CFO
13-Nov-2017 Announcement General Announcement::CapitaLand Mall Trust - "SGX-REITAS Education Series - 13 November 2017 (Key Slides)"
13-Nov-2017 Announcement General Announcement

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