Capitaland 01 (May 08 - May 10)

[winston]

Capitaland may have looked at their commitments, the credit markets and their ability to raise funds going forward, and decided that perhaps they had better call for rights now while people are still willing to pony up the cash and the stock price is at a level where its still doable.

Agree. Not vested also and will not be for a while more ...

[LenaHuat]

Wow, so many specu-vestors buy the war chest story

[winston]

Wonder who's next to tell their war chest story ?

Keppel? Semb Corp ? Singtel ? SIA? Chartered?

[helios]

Wow, so many specu-vestors buy the war chest story

skeleton in the wardrobe?

[LenaHuat]

Hi SanSan

Don't really know. I recall that the war chest is gunning for Chinese distressed assets.
And if U had watched the CCTV tower go up in smoke..........my sweat breaks out

[LenaHuat]

Well, if U still have faith in the rating agencies, here's from BT:-

S&P revises outlook on CapitaLand to negative, it also withdraws unsolicited rating

By KALPANA RASHIWALA

Standard & Poor's on March 3 revised its outlook on the BBB+ long-term unsolicited corporate credit rating on Singapore-listed property giant CapitaLand to negative from stable. At the same time, the rating on CapitaLand was affirmed before being withdrawn, S&P said in a release issued on Tuesday.

S&P said that without full interaction of the company in the rating process, it is no longer able to provide an informed credit opinion based on publicly available information.

'Under the current volatile environment, a comprehensive understanding of the company's strategic and commercial response to the slowdown in the residential and commercial property business in its core markets is an important credit consideration,' S&P said.

[iam802]

what is after 'negative'?

Without a comprehensive understanding, it is rated negative (before they withdrew it). So, with full understanding, does it becomes junk?

[millionairemind]

Rights 22% over-subscribed.

http://info.sgx.com/webcoranncatth.nsf/ ... penelement

[winston]

From GS:-

Source of opportunity

We upgrade CapitaLand to Buy (from Neutral) and add it to our Conviction List as we see its wide discount to NAV of 38% vs. City Dev of 21% (Sell) as attractive given its diversified business model and strong balance sheet (better positioned today than during the 1998 down-cycle when its gearing was 0.95X vs. 0.27X currently).

Moreover, its decision to step up efforts to dispose investment assets (S$7bn in two yrs) to raise cash has positioned it well to reinvest for the next cycle. We believe CapitaLand could look at potential acquisitions once macro conditions improve, enabling it to generate above sector NAV growth in the next 3 years.

Catalyst
Our stress tested valuation (further 10ppt below 1998 prices) shows that the stock has moderate downside, at 7% below current prices. Also, stressed tangible BVPS post write downs and provisions is S$2.36 (-16% erosion). While we expect news flow on the sector to be dominated by DPS risk, this should be offset by CapitaLand's defensive mix.

We identify the following share price drivers:
1) a war chest of S$6bn, and allocation of cash would be a catalyst when markets stabilize;
2) provisions on its residential land bank, as early as 1H09 results. Any kitchen sinking would accelerate the earnings adjustment process, leading to potential share price recovery (similar to 2001);
3) good take up of CapitaMall’s (Neutral) rights issue would free up capital commitments;
4) China’s property market stabilizing by late 2009E, before Singapore in mid ‘10.

Valuation
38% disc to NAV is at the low end of its historical range. We cut our 09E-NAV 5% to S$3.35 and write down Ascott. We cut our 12-m TP to S$2.68 from S$2.81; we maintain our 20% disc to RNAV. We cut ‘09-10E core EPS by 5-25% on weaker prices and raise ‘11E by 12% on a pick up in residential contribution.

Key risks
Residential cycle bottoms out earlier than our expectations (of mid 2010).

[winston]

- Property firm CapitaLand's president and chief executive Liew Mun Leong was awarded a bonus of S$20.52 million ($13.6 million) in 2007 helping the property developer achieve a record profit of S$2.76 billion that year.