Capitaland 01 (May 08 - May 10)

[millionairemind]

CIMB calls for SELL, DMG calls for BUY

CapitaLand
Buy
DMG & Partners Securities, July 31 close: $3.82

CAPLAND has announced a $1.1 billion seven-year unsecured convertible bond issuance, which could increase by up to another $100 million should a 30-day overallotment option be exercised. With a coupon and yield to maturity rate of 2.875 per cent, the CBs will expire on Sept 3, 2016.

Conversion price of $4.79 represents a 20 per cent premium to Thursday's closing price of $3.99. Objectives are: 70-80 per cent for refinancing existing debts, including $250 million out of the $1.3 billion CB due March 2018 and other short term loans such as its medium-term notes, as well as 20-30 per cent for funding new investments and/or working capital. This represents CapLand's fifth CB issuance since 2002.

We view the CB issuance positively, as it will further bolster CapLand's balance sheet and extend its debt maturity profile. Funding cost of 2.875 per cent is also very attractive, given that credit spreads remain elevated despite improved liquidity.

Additionally, this again demonstrates CapLand's good funding accessibility and banking relationships. Against management's comfortable gearing range of 0.50-0.75, new net gearing of 0.41 and $5.3 billion cash imply ample debt headroom for acquisition opportunities in key markets of China, Singapore and Australia.

We are raising our RNAV-backed target price to $4.43 to reflect the slight accretion on the assumption of full CB conversion. Our FY2009F-2010F EPS is also tweaked downwards by 2.5-6.0 per cent to account for the increased interest expenses.

Similar to its four previous CBs, CapLand should be subjected to some near-term weakness due to dilutive impact of CB's potential new shares. Nonetheless, prospective site acquisitions ahead and its burgeoning China driver should catalyse the stock upwards following short-term pullback. Maintain 'buy'.

[winston]

China Housing Market Recovery Not a ‘Bubble,’ CapitaLand Says By Liza Lin

July 31 (Bloomberg) -- China’s real estate market recovery will be driven by domestic demand and isn’t in a “bubble,” according to CapitaLand Ltd., a Singapore developer whose China operations were its only profitable unit last quarter.

Most buyers for their residential projects are home buyers, Liew Mun Leong, Chief Executive Officer at the Singapore-based developer said in an interview yesterday. “I have not seen excessive investment in the real estate sector so far,” he said. “Prices have gone up beyond 2008, 2007, but are still lower than pre-Asian crisis so there is still room to creep up.”

China housing sales have surged 45.3 percent on-year in the first five months as stimulus spending stoked investment and domestic demand. Residential prices in 70 major Chinese cities gained 0.2 percent in June from a year earlier, and rose 0.8 percent from May, the fourth straight monthly gain, the National Development and Reform Commission said July 10.

CapitaLand, which had been looking to use its S$4.2 billion in cash to acquire distressed assets in China in March this year, said the real estate recovery made the search more difficult.

“We thought there would be quite a fair bit of distressed assets to take advantage of, but the reality is that the China market recovered so fast, companies no longer remain distressed in their financial management,” Liew said.

Still, CapitaLand’s stock price has almost doubled over the last six months to S$3.83. Shares are up 94 percent since Feb 2, outstripping the 55 percent rise in the benchmark Singapore stock index.

China Contribution

CapitaLand posted a S$156.9 million ($109 million) loss last quarter, its first since 2003. It has projects in cities including Beijing, Shanghai and Guangzhou. It had S$6.5 billion in Chinese assets last year, and aims to grow its China assets to about $8 billion by 2014, Liew said.

CapitaLand, whose sales from China, Hong Kong and Macau were its biggest contributor to total revenue last quarter, expects its residential and retail business to drive growth in the world’s third-biggest economy, he added.

Contributions from China helped mitigate the volatility in the developer’s earnings, Foo Sze Ming, OCBC Investment Research analyst said. He has a ‘hold’ call on the stock. “China is one of the growing countries despite the economic crisis and we continue to see sustainable demand for housing coming from urbanization,” he added.

Source: Bloomberg

[millionairemind]

Published August 19, 2009

CapitaLand allots $1b to Ascott, China, Viet arms
Group expects to reduce cash levels from $2.8b to $1-2b over 6-12 months

By KALPANA RASHIWALA

PROPERTY giant CapitaLand has deployed about $1 billion from its $1.8 billion rights issue earlier this year to grow its China, Vietnam and Ascott businesses. The money will be used to increase the respective capital base of these three wholly owned businesses of the group.

Thinking long-term: Mr Lim (left) and Mr Liew. Vietnam offers potential to be the group's fourth growth pillar - after Singapore, China and Australia, says Mr Liew

CapitaLand group CFO Olivier Lim said that, over the next 6-12 months, the group expects its corporate treasury cash levels to be reduced from the existing $2.8 billion to $1-2 billion, partly by pre-paying debt that matures in the next two to three years, and partly by deploying capital to investment opportunities that may arise.

The $2.8 billion corporate treasury cash is part of the $4.2 billion cash and cash equivalents as at June 30, 2009, as reported with CapitaLand's first-half results last month.

Half or $500 million of the additional capital deployment will go to CapitaLand China Holdings, $299 million to CapitaLand (Vietnam) Holdings and $200 million to serviced apartment chain The Ascott Group.

The balance of about $800 million will be set aside for further investment opportunities that the group's business units may identify, CapitaLand added.

The group's $1.1 billion convertible bond (CB) issue, which was announced late last month, was upsized this week to $1.2 billion. Upon settlement of that CB issue, CapitaLand will have more than $4 billion of long-term core debt comprising CBs and medium-term notes with an average maturity exceeding six years, the group said.

'This core debt position provides the group with a safe capital structure that can withstand market stresses that might arise through a business cycle.'

Following the additional capital deployment, the paid-up capital of CapitaLand China has increased to $1.45 billion; CapitaLand (Vietnam), to $300 million; and Ascott, to $472.3 million.

CapitaLand group president and CEO Liew Mun Leong said that Vietnam offers potential to be the fourth growth pillar for the group - after Singapore, China and Australia. 'We are thus increasing our capital and human resources in the country.

'We continue to remain committed to our existing projects in the Gulf Cooperation Council region, Thailand, Malaysia, Japan and India. Our focus will continue to be in Asia, which has strong fundamentals, greatest opportunities, and where we can leverage on our established operations on the ground.'

CFO Mr Lim, declaring that the group had met its capital management objectives for extending debt maturities, reducing leverage, and increasing cash liquidity, said: 'Looking back, the point of maximum stress in the markets was between September last year and March this year.

'Since then, there has been broad recovery in almost all risk classes, the most notable of late being the credit markets globally which saw significant improvement in the last two months.

'There are still remaining risks, in particular, whether economies and financial markets might experience a double dip. Looking forward, while the group remains vigilant and sensitive to these risks in the short term, it is firmly focused on the long-term opportunities for growth.'

In the stock market yesterday, CapitaLand ended seven cents higher at $3.63.

[LenaHuat]

Juz 6 months ago, this ticker was 'capital stressed' and there was aplenty talk abt opportunities.
The truth is its asset banks were acquired at pretty stiff prices.

[millionairemind]

Juz 6 months ago, this ticker was 'capital stressed' and there was aplenty talk abt opportunities.
The truth is its asset banks were acquired at pretty stiff prices.

So Lena, can short or not??

[LenaHuat]

Hi MM
I think there could be another round of write-downs in the balance sheet

[LenaHuat]

Last week and after a pretty long interval, I'm happy to hear some sensible news from this ticker namely:-
(a) won't be bidding for Laguna Park. They are asking for greedy prices.
(b) The Interface will not be 'greedily' priced

I'm still waiting to pick up this ticker.

[winston]

Not vested. From Lim & Tan:-

Pricing To Sell / No Plans To Restock S$3.77-CAPL.SI

CEO Liew Mun Leong said the company would try to keep the launch price for The Interlace at below $1000 psf.

The Interlace, whose architect is Ole Scheeren, will rise from the site that used to be Gillman Heights, which it acquired in an en-bloc deal in 2007, in partnership with Hotel Properties (HPL) and NUS. C-Land has the biggest 60% stake in the project, where land cost alone was $363 psf and breakeven estimated at around $750 psf. There will be 1040 units in The Interlace.

At say $950 psf, pre tax profit is estimated at $200 mln, of which C-Land’s share would be around $120 mln.

Looking at how property stocks have performed when meeting with good response to their respective launches this year (Allgreen, Fraser & Neave), we would expect the same for C-Land if the response is as good as for most projects launched in the year-to-date.

What may however “disappoint” is Mr Liew’s disinterest in replenishing C-Land’s land-bank, which will run out by end 2010 when C-Land would have launched the remaining 2 projects. (He has ruled out bidding for Laguna Park, which has been put up for en-bloc sale at $1.2 bln or $844 psf, as he deemed it too expensive.)

C-Land’s remaining 2 projects are:

- the 165-unit condo at the former Char Yong Gardens for which C-Land paid $1788 psf in Jun ’07, with breakeven estimated at $2300 psf. The architect is Kerry Hill. (Char Yong was acquired after Silver Tower in the same vicinity, in Sept ’06, for which C-Land paid $161 mln or $1107 psf.)

- the 1500-unit Farrer Court for which C-Land and partners (HPL and Morgan Stanley Real Estate) paid record $1.34 bln or $783 psf, also in Jun ’07, and breakeven estimated at $1350-1450 psf. The architect is the even-more famous Zaha Hadid.

Maintain BUY. (Note however technical resistance at the twice-tested $4 level.)

[winston]

Diwosification. Not vested. From DBS:-

Capitaland’s joint casino project partner in Macau said that disagreements with its business partner New Cotai had led to delays in getting land-use approval.

CapitaLand owns a 20% stake in the US$2 bn Macao Studio City through a joint venture
firm.

[winston]

SINGAPORE, Oct 5 (Reuters) - CapitaLand , Southeast Asia's largest developer, and two of its units, CapitaRetail China Trust and CapitaMall Trust , requested a trading halt on Monday, pending a corporate announcement.

Source: Reuters