CapitaLand

CapitaLand: BoAML reinstates with Neutral (TP $3.52) pegged to 20% discount to FY15E RNAV. The house believes narrowing of holding company discount trade post privatisation of CMA is over and material operational results need to be shown before further upside can be recorded. There are signs of lease recovery in China malls and it is not inconceivable for CAPL to achieve 15-20% increase in renewal rents. However, malls and developments acquired in 2010-13 are still at sub-par initial yields of 4-5%. China malls remain difficult with pricing power lying in a few players. Positive rental reversions need to surprise materially before upgrade is possible.