I previously thought that CapitaLand (OTCPK:CLLDY) looked like an undervalued property developer with balanced exposure to Singapore and China
and strong portfolio diversification. The markets appear to have
agreed, with CapitaLand's shares rising about 15% over the past six
months - outperforming comps and peers like City Developments (OTCPK:CDEVY), Keppel Land (OTCPK:KPPLY), Global Logistics Properties (OTCPK:GBTZY), and Cheung Kong (OTCPK:CHEUY) (which I also liked and is up more than 10% over the past six months).
I believe that CapitaLand's decision to reacquire all of CapitaMalls Asia
played a meaningful role in this outperformance, but I don't think that
is the only trick up management's sleeve. Although the property markets
in Singapore and China are in rougher shape now, I don't believe the
company has much value at risk and there are attractive opportunities on
the way to re-price below-market leases in its Chinese mall business.
The key question is still whether or not management can lift ROEs back
into the high single-digits or low double-digits, but I still believe
that they can (and will) and that these shares have value to around
$6.50/ADR.
I should also note here that CapitaLand is not
particularly liquid as ADRs go. Investors should be careful when buying
(limit orders are a good idea) or try to buy the much more liquid
Singapore-listed shares, as most large brokers now make international
trading available to retail investors at affordable commissions.
Follow this link to the full article:
CapitaLand Remains Undervalued Amidst Challenging Property Markets
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