To support funding needs for new and existing projects in China, CapitaLand also signed cooperation agreements with Bank of China and Industrial and Commercial Bank of China to obtain a credit limit allocation of up to RMB25b (S$5b) to fund CapitaLand’s various business operations across China. We view this as positive accreditation of CapitaLand’s presence in the Chinese market.
CapitaLand’s launches in Foshan and Chengdu this year have been well-received, with small ASP increments with subsequent launches. CapitaLand is looking at replenishing its landbank in Shanghai and Beijing. According to the Straits Times, CEO Liew Mun Leong believes that Tianjin and Changsha also present a lot of opportunities.
CapitaLand had increased its stake in Gillman Heights from 50% to 60% in mid-May, and could possibly launch the new project for sale by 2H09. With construction costs easing, we estimate the breakeven price to be around $753 psf, with an ASP of about $900 psf. CapitaLand may also re-launch Latitude at Jalan Mutiara at an ASP of about $1600 psf.
We view the move to increase its asset allocation into China positively, as CapitaLand already has a 15-year track record in the ever-growing Chinese market. Even sentiments in the Singapore residential property market have improved, suggesting the possibility of more sales in 2H09 and 2010. We reiterate our BUY recommendation, with a target price of $4.24, pegged to a 10% premium to our RNAV of $3.85.
Sponsored Links
Comments
No response to “CapitaLand - Asset allocation into China to increase to 40-45%”
Post Comments (Atom)
Post a Comment |
Post a Comment