CapitaLand Looking To A Large Acquisition To Accelerate Value-Creation

As I’ve lamented in the past, Singapore’s CapitaLand (OTCPK:CLLDY) (CATL.SI) seems stuck in the S$3 to S$4 range no matter what the company does. Although capital recycling, earnings and ROE exceeded expectations in 2018, the stock couldn’t break out of that range. Likewise with the thesis-changing acquisition of Ascendas-Singbridge (“Ascendas”), though the shares are at least a little higher now than when I last wrote about the company.

I continue to believe that CapitaLand is undervalued, and the Ascendas acquisition should not only meaningfully diversify the company, but also create a richer opportunity set of capital recycling options. On the other hand, while CapitaLand is a pretty well-known name in Asian property development and the Ascendas deal will make it a top-10 global player, it’s not well-known to U.S investors, the ADRs are not particularly liquid, and real estate development companies aren’t exactly growth stocks. Consequently, while I do see enough upside here to consider it a long idea, it’s not going to suit all readers or investors.

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CapitaLand Looking To A Large Acquisition To Accelerate Value-Creation