On 3 November 2020, I wrote that CapitaLand share price could have bottomed when the blue chip sunk to a low of $2.50. At that price level, my diagnosis was that it was a good opportunity to enter this counter. Subsequently, CapitaLand share price turned on the style to stage a magnificent recovery, soaring from $2.50 to a high of $3.30 in recent days. Christmas certainly came early for CapitaLand investors but is the current rally of CapitaLand share price sustainable in 2021?
The recent resurrection of CapitaLand share price can be attributed to a combination of several potent factors. Firstly, with Joe Biden being confirmed as the new President of United States, much uncertainties had been removed from global stock markets. As a result, most of the Straits Times Index (STI) components rediscovered their forms lately. And CapitaLand share price, being one of the leading lights in SGX, was no exception.
Secondly, 2021 could be a pivotal year for CapitaLand share price as the Group attempts to ride on the much-anticipated COVID-19 recovery in Singapore and China. As of September 2020, 43% of the Group’s assets were in Singapore while 37% of the assets were in China. In the post pandemic era, the figures are likely to change drastically due to the series of transformative strategies implemented by the management.
Looking back, 2020 had been a disastrous year for CapitaLand share price as the stock plummeted from a high of $3.95 in early January 2020 to a low of $2.60 in March 2020. The volatility of CapitaLand share price certainly gave investors plenty of sleepless nights. Despite so, I have always maintained that this is a value stock worth buying as Price/Book Value is just 0.666 at the point of writing.
Question now is whether the management is able to unlock the true value of CapitaLand share price through its perennial asset recycling programme. In my opinion, China could hold the key in CapitaLand share price returning to its glorious days last seen under the helm of former CEO Liew Mun Leong.
In this article. I will share my insights on the outlook of CapitaLand share price in 2021. 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 CapitaLand 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 in new China pivot
Part of the reason for the bullish CapitaLand share price in the latter part of 2020 could be the revelation of the 3Q business update which saw robust China residential sales. Year-to-date September 2020, the sales value amounted to nearly RMB11 billion, an increase of 28% year-on-year.
1,400 more units were expected to be released in China for the rest of 2020. In addition, 6,400 units sold with a value of RMB15.9 billion are expected to be handed over from 4QFY2020 onwards, with 50% of value expected to be recognised over the next 3 months. The resilient China real estate market set CapitaLand share price on fire. To this end, the management must have thought of striking the iron while its hot.
In 2021, things could shake up a bit for CapitaLand share price 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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