CapitaLand

CapitaLand: is the top bidder for the Bishan residential site with bid of $505.1m ($853 psf gfa), a narrow 3% above the 2nd highest bid. The parcel is next to CAPL’s Sky Habitat project, and a short walk to Bishan MRT and Junction 8. With a max gfa of 592.2k sf, it can be developed into a 645 unit condo. Deutsche estimates breakeven at $1,280 psf, which implies margins of 15% based on ASP of $1,500 psf, broadly on par with Sky Habitat. This acq is of strategic importance to CAPL, given its proximity to Sky Habitat (where sales have been relatively sluggish with 28% sold to date at benchmark prices), allowing it to protect its turf. The house estimates a minor 1ct/sh accretion to NAV. This latest site boosts CAPL ‘s Spore residential inventory by 27% to ~2.8m of attributable gfa and increases its mid-end exposure. Deutsche continues to like CAPL for its deep devt pipeline, improving earnings profile as projects mature and see mgt succession as positive for execution. Says valns appear undemanding at 1x P/B and 23% discount to RNAV. Keeps at Buy with TP $3.87. Technical outlook for CAPL is positive, with the stock having made a new multi year high yday. We note the Fibo retracement levels (using the Jan ’10 peak to Dec ’12 trough) have worked well thus far. A successful breach above the 0.62x resistance at $3.52 could see the stock as a potential bullish breakout candidate, and move next to test the 0.78x Fibo level at $3.88.