Capitaland

Capitaland: Deutsche maintains Buy with TP $4.00 calling the counter undervalued to the core. Note that given recent share price weakness in the listed subsidiaries, valuations are attractive at a deep 41% discount to RNAV (1 std-dev below LT average) and an even larger 62% discount excluding the listed subsidiaries. The recent de-rating of CMA and other listed subsidiaries has had a relatively minor impact on valuations. Even if one applies a 10-20% holding company discount on C-Land’s listed entities, the implied discount remains wide at between -57% to -52%. Similarly with CMA and CMT both trading above book NTA, the P/B for CapitaLand ex-listed entities has fallen to 0.53x, close 10-year lows. Expect CAPL to re-rate on a 12-mth view given a maturing development pipeline and a focus on driving asset turnover which should boost returns on equity. An easing of macro uncertainty and policy stance in Singapore in 2H14 should also provide tailwinds. Overall, CapitaLand remains the house top pick among the developers, given its maturing commercial property pipeline and offshore exposure.