CapitaLand Limited 3Q18 Results Summary
Core Content Overview
CapitaLand Limited (CAPL) reported its 3Q18 results, showing that gross revenue and total PATMI were in line with expectations. The company's performance was influenced by a mix of factors including the consolidation of certain entities, changes in rental revenue, and asset recycling activities. The report also includes key financial metrics, valuation data, and analyst recommendations.
Main Points
Positive Aspects
- Recurring Income Boost: CAPL increased its recurring income through the acquisition of a S$1.1bn US multifamily portfolio and a 70% stake in TAUZIA, an Indonesian hotel operator. This aligns with the company's strategy to grow its AUM to S$10bn by 2020.
- Healthy Tenant Sales Growth: In Singapore, the retail portfolio showed a 2.2% YoY tenant sales growth (vs CMT's 0.5%), driven largely by ION Orchard's 2.9% growth. In China, the largest market, the retail portfolio saw a robust 20.9% YoY growth.
- Strong 4Q18 Outlook: China residential pre-sales are expected to be a bumper quarter for the year, with over 90% take-up rates in recent launches. Management anticipates continued momentum for the remaining 1850 units, pending regulatory approval.
- Capital Deployment: CAPL has actively redeployed capital, including the acquisition of two prime residential sites in Guangzhou and a mixed-use site in Chongqing. Additionally, it recognized fair value gains of S$131.5mn from the divestment of its stake in Westgate.
- Valuation and Target Price: The analyst maintained an Accumulate rating with an adjusted target price of S$4.00, which corresponds to a FY18e P/NAV ratio of 0.72x. This suggests the stock is trading at a discount to its RNAV.
Negative Aspects
- Deferrals in China: Several new launches in China were deferred due to ongoing cooling measures and restrictions on selling prices, which may affect future revenue projections.
Key Financial Highlights
| Metric |
3Q18 (SGD mn) |
3Q17 (SGD mn) |
YoY (%) |
9M18 (SGD mn) |
9M17 (SGD mn) |
YoY (%) |
| Gross Revenue |
1,260 |
1,516 |
-16.9% |
3,978 |
3,406 |
+16.8% |
| EBIT |
796 |
795 |
+0.2% |
2,868 |
2,409 |
+19.1% |
| Finance Costs |
(163) |
(129) |
+26.5% |
(468) |
(337) |
+38.9% |
| Total PATMI |
362 |
319 |
+13.6% |
1,287 |
1,292 |
-0.4% |
| Operating PATMI |
234 |
207 |
+13.0% |
658 |
582 |
+13.1% |
Company Data
| Metric |
Value |
| Bloomberg Code |
CAPL SP Equity |
| Outstanding Shares (MN) |
4,163 |
| Market Cap (USD/SGD mn) |
9,423 / 12,988 |
| 52-Week High/Low (SGD) |
3.88 / 2.98 |
| 3M Average Daily Turnover (MN) |
7.15 |
Major Shareholders
| Shareholder |
% Ownership |
| Temasek Holdings |
40.4% |
| Blackrock Inc |
7.0% |
| Vanguard Group |
2.0% |
| Norges Bank |
0.9% |
| State Street Corp |
0.9% |
Price Performance
| Metric |
1M TH |
3M TH |
1Y R |
| Company |
-10% |
-6.1% |
-10.4% |
| STI Return |
-0.8% |
-5.6% |
-7.2% |
Valuation Ratios
| Metric |
FY15 |
FY16 |
FY17 |
FY18e |
FY19e |
| P/E (X), adj. |
12.5 |
11.1 |
8.5 |
12.4 |
13.2 |
| P/B (X) |
0.79 |
0.74 |
0.72 |
0.72 |
0.69 |
| Dividend Yield (%) |
2.9% |
3.2% |
3.8% |
3.8% |
3.8% |
RNAV Table
| Segment |
RNAV (SGD mn) |
| Development Properties |
7,647 |
| - Singapore Residential Surplus |
61 |
| - China Residential Surplus |
3,462 |
| - Other Overseas Residential Surplus |
51 |
| Investment Properties |
20,880 |
| - Singapore |
2,608 |
| - China (Includes HK) |
14,189 |
| - Japan |
1,561 |
| - Other Asia |
694 |
| - Europe, U.S. and Australia |
1,828 |
| Listed / Unlisted Entities |
5,748 |
| - CMT |
2,206 |
| - CCT |
1,887 |
| - CRCT |
409 |
| - ART |
1,008 |
| - Others |
238 |
| Fund Management Platform |
36,933 |
| - Less: FY18E cash (net debt and committed CAPEX) |
-15,568 |
| RNAV |
21,365 |
| RNAV/share (SGD) |
5.00 |
| Premium/(Discount) to RNAV |
-20% |
| Fair Value (SGD) |
4.00 |
Outlook and Analyst Recommendation
- Recommendation: Maintain Accumulate.
- Target Price: S$4.00 (adjusted from previous S$4.19).
- Total Return Forecast: 30.9%.
- Key Drivers: Continued momentum in China residential pre-sales, stable recurring income from investment properties, and active capital redeployment.
Ratings History
| Total Return |
Recommendation |
Rating |
| > +20% |
Buy |
1 |
| +5% to +20% |
Accumulate |
2 |
| -5% to +5% |
Neutral |
3 |
| -5% to -20% |
Reduce |
4 |
| < -20% |
Sell |
5 |
Important Notes
- The analyst considers both quantitative and qualitative factors in making recommendations.
- Investment involves risks, and the report is not intended to provide tailored advice.
- The information is based on sources believed to be accurate, but no guarantees are made.
