Monday, October 24, 2011


CapitaLand: 3Q11 results was below consensus.
Earnings were below forecast due to weaker overseas earnings. Net profit of $80.2m was -53% qoq, -83% yoy, and that was including a $32m gain from an Ascott divestment. On a 9mth basis, net profit was $581m, making up just ~55% of Street FY11E estimates.

Residential sales and recognition disappointed both domestically and abroad,
i) slow S’pore residential sales , 67 units sold in 3Q vs. 104 in 2Q, a broader reflection of softness in the prime segment, with ytd sales of 338 units ($0.7b) vs. 520 units ($1.4b) ytd 2010; CAPL’s Bedok Central (583 units), a 4Q launch should see good interest with mass end sales price elastic, yet still falling short of its 2,000- unit sales target for 2011;
ii) China sales fared no better, as CAPL held firm on pricing: 409 units sold in 3Q vs. 493 in 2Q, with ytd sales to 1,339 units ($0.5b) vs. 1,935 units ytd 2010, short of its earlier 4,000 homes sales guidance for 2011; 4Q earnings though should see lift with 3 projects scheduled for completion by end 2011.

StanChart sees little near-term upside for CAPL. Notes CAPL outperformed peers in Spore and China in the past 3 months (ie KPLD, COLI and CR Land), partially due to its share buyback; this is despite a ~30% fall in the share prices of its listed subsidiaries: CMA, CCT, ART and ALZ. The house cuts RNAV estimate by 16% to $3.70/sh to account for the decline in these subsidiaries and lower the capital value for the Market Street office redevelopment. Lowers TP to $2.75 from $3.75, set at 0.75x P/RNAV, from 0.85x previously.

Goldman, Nomura keep at Buy with TP $4.28, 4.05 rptvly.
Deutsche keeps at Buy but lowers TP to $2.80 from $3.03.
JPM maintains Overweight and TP $2.80. Notes expectations of a positive price catalyst are low now, which perversely may limit the downside risks, and a modest share buyback may also provide a signal of mgt’s impression of value in the stock.
Credit Suisse maintains Outperform with TP $3.50.

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