Seeking Alpha: CapitaLand Remains Undervalued Amidst Challenging Property Markets

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.

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CapitaLand Remains Undervalued Amidst Challenging Property Markets

Seeking Alpha: Keppel Corp.'s Frustrating Lack Of Progress

As Top Idea picks go, my bullish call on Keppel Corp. (OTCPK:KPELY) in September of 2013 has been lousy - the shares are down a little less than 1% since then (lagging the Straits Times Index by about 2%) and readers would have frankly been better off with a money market account. The good news, if you can call it that, is that nothing has fundamentally changed for the worse for Keppel and there are arguments to be made that the business is stronger today. The sentiment around marine builders isn't great right now given shaky dayrates and utilization, not to mention uncontracted rigs coming out of shipyards later this year, but I continue to believe that Keppel is a high-quality play on a long-term offshore cycle that isn't over yet.

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Keppel Corp.'s Frustrating Lack Of Progress

Seeking Alpha: CapitaLand's Valuation Looks Too Low

Even though CapitaLand (OTCPK:CLLDY) (CATL.SI) has established a reputation for itself as a quality property developer in Singapore and China, investors seem to be more scared of the near-term risks in Singapore and China than attracted to the long-term potential. Trading well below its average and median price/book and price/RNAV ratios, investors seem to be incorporating pretty pessimistic expectations for the business both in 2014 and beyond. Readers considering these shares today need to appreciate the risks of swimming against the tide, but patience could pay off given the company's leverage to China's growth and management's commitment to streamline and improve operations.

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CapitaLand's Valuation Looks Too Low

Seeking Alpha: Keppel's Collected Parts Are Undervalued

I'll say it right up front - researching, valuing, and owning Singapore's Keppel Corporation (KPELY.PK) is going to be more of a headache than some investors want. This large conglomerate not only operates a huge rig-building shipyard and power/gas infrastructure business, it also owns sizable stakes in numerous listed companies, including Keppel Land (KPPLY.PK) and K-REIT. If that weren't enough, the government-owned investment company Temasek is a major holder of Keppel shareholders and quite a lot of Keppel's projects ultimately involve dealing closely with the government.

Despite those risk factors and/or drawbacks, I'm bullish on Keppel. While the company's shares took a big step down during the global recession, the company has a long-term history of building shareholder value. With the company still looking forward to significant rig orders and owning a majority stake in a premier Asian property developer, I believe Keppel is a solid, undervalued, income-generating stock trading about 20% below its fair value, and a stock that is capable of being a core holding for those looking to add international exposure.

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Keppel's Collected Parts Are Undervalued