• Management sees Singapore residential slowing in 1H18 amid cooling measures. Due to its limited Singapore residential exposure, the group continues to be well- positioned to seek local and overseas expansion (and on track to grow its AUM to S$100b by 2020).
• Amid cooling measures restricting price growth in China, the group has delayed some of its launches. Management also seeks to expand further in Vietnam (up to 10% capital allocation).
• Maintain BUY with a lower target price of S$3.78.

2q18 Results

Results in line with expectations.

CapitaLand’s (CAPL) 2Q18 net profit of S$605.5m was up 4.4% y-o-y, mainly due to higher contributions from newly acquired and opened investment properties in Singapore, China and Germany, revaluation gains registered by its portfolio investment properties; but partially offset by lower portfolio gains and contribution from residential projects (from Singapore and China). Excluding exceptional items (gains from the sale of The Nassim), 1H18 operating net profit grew 8.8% y-o-y (or S$34.2m) on the back of higher recurring income from retail and commercial businesses, partially offset by lower contributions from development projects in Singapore and China.

Source: UOB Kay Hian Research - 10 Aug 2018