CapitaLand

CapitaLand: S$3.18) Investing in “China’s Airbnb”

Ascott, the serviced residence arm of the property group, is leading a consortium to invest US$50m in Tujia.com, China’s largest and fastest growing online apartment sharing platform, in a bid to digitalise and future-proof its business.

Apart from injecting funds, Ascott will also enter into a US$40m ($55m) JV with Tujia to operate serviced apartments in China, bolstering the group’s pipeline in the country to help reach its target of 20,000 units by 2020, up from the existing 14,000 units.

Tujia, often compared to its US peer Airbnb, has raised US$300m at a valuation of more than US$1b from its fourth round of fund raising exercise. Other notable investors include HomeAway, Ctrip.com, LightSpeed Venture, and GGV Capital.

The funds will be used to expand Tujia’s services into Asia destinations in light of booming demand from Chinese travellers. The online platform currently list 310,000 apartments across 388 destinations and it is targeting to list more than 400,000 units by year end.

The startup is also expecting to ride on the weakening Chinese economy, which may encourage homeowners to list their properties for additional rental income and offer travellers cheaper alternatives to hotels.

Key risk faced by Tujia is regulatory uncertainty around the globe as its unique business model may disrupt the traditional hospitality industry.

Nonetheless, management on both ends are sanguine that the collaboration is mutually beneficial as the group is able to deepen its penetration among Chinese travellers, whilst Tujia can leverage on Ascott’s experience in offering world-class serviced apartments.

CapitaLand has also formed a new Technology Council on 3 Aug, consisting of managing partners from GGV Capital, Matrix Partners China and CEO of Media Development Authority Singapore. The council is tasked to keep the group abreast with latest technology developments.

The street is generally bullish on the counter for its diversifies exposure, with 18 Buy and 5 Hold ratings and consensus TP of $4.05.