Capitaland rated buy

Thursday, 19 March 2009 14:05
Goldman Sachs in a Mar 19 research report says: "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% 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 ($7 billion in two years) 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 three years. We cut our 12-month target price to $2.68 from $2.81; we maintain our 20% disc to RNAV. We cut 2009-2010E core EPS by 5-25% on weaker prices and raise 2011E by 12% on a pick up in residential contribution. UPGRADE TO BUY."Back to Top