CapitaLand: to buy 40% stake in Surbana (wholly owned by Temasek Hldgs) for $360m.
Surbana is the corporatized arm of HDB. Besides its strong track record in planning, designing and project mgt for Spore's HDB projects, Surbana is also a township developer in China, with projects in Shenyang, Xi'an, Chengdu and Wuxi, with a GFA of ~6m sqm.
CapL will fund the transaction with internal funds and available cash. Expect market to view this acquisition positively, as i) CapL can leverage on Surbana’s expertise in large scale mass mkt residential projects to execute its low cost housing projects in China, ii) this shows that mgt is proactive in deploying its excess cash (~$7b) and committed to its guidance for $5-6b in new investments for the group this year.
Street currently has mixed ratings, with 3 Buys and 2 Underperforms in Apr. TP estimates range btwn $3.41 – 4.30.
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