CapitaLand share price flying with Liang Court redevelopment

Since my last coverage on 1st October 2019, CapitaLand share price had turned on the style, surging from $3.40 to $3.70. The driving factors for the bullish form of CapitaLand share price stem from the recent asset recycling activities and sale of new launches.

As of 20 November 2019, CapitaLand had divested close to $5.7 billion worth of assets, exceeding their annual target divestment of $3 billion. The most notable recent divestment was the divestment of The Star Vista for $296 million to Rock Productions. According to the management, the deal is expected to yield net proceeds of about $145 million and a net gain of about $32 million. The slew of divestments had led to the buoyant CapitaLand share price in 2019.

CapitaLand share price

Another catalyst for CapitaLand share price was the strong sale performance for its residential units in Singapore and China. One Pearl Bank has sold 235 of the 280 launched units while Sengkang Grand Residences sold 216 of the 280 available units. In China, the Group sold 3,694 units in the first nine months of 2019 with a value of RMB8.5 billion, and expects to launch an estimated further 1,700 units in 4QFY2019.

Against the backdrop of positive news, will CapitaLand share price continue to run going forward? In my previous article on CapitaLand, I mentioned that the traditional best window to enter this counter is September to October. In view of this, has CapitaLand share price really bottomed out and should investors strike while the iron is hot now?

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in this counter before. Whether CapitaLand share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

CapitaLand share price needs a breakthrough

Despite recent uptick in CapitaLand share price, this counter is still trading below its book value. Price/Book Value is 0.822. The poor valuation is not due to its poor management nor lacklustre business results. In fact, revenue actually surged from $3.9 billion in FY2014 to $5.6 billion in FY2018. In the same period, the net income increased from $1.16 billion to $1.7 billion. Instead, the sluggish CapitaLand share price is a sector-wide issue faced by many of its peers in Singapore such as City Development, Ho Bee Land, Wing Tai and many other developers also suffered poor valuations.

But things could change for the better in 2020 as [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: December 10, 2019 — 12:45 pm

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