Maintain BUY; Target Price SGD3.80

• We cut Target Price to SGD3.80, based on a revised RNAV discount of 30% (from 25%). With a small exposure to Singapore’s residential market, our RNAV and EPS revisions are small at 0.2% and 2% respectively.
• CapitaLand’s current valuation is attractive at just 0.67x P/BV and steep RNAV discount of 45% after the recent sell down.
• Maintain BUY.

Cutting ASP Assumptions

With a 5-10% increase in ABSD for property investors, we expect developers to lower ASPs to stimulate demand. Nonetheless, its exposure to Singapore’s residential market is small as most of its previously launched projects have been sold.

We cut ASP for the redevelopment of Pearl Bank Apartments by 10% to SGD2,150 psf.

Source: Maybank Kim Eng Research - 06 Jul 2018