CapitaLand share price worth $5.00?

Being a diversified real estate giant, CapitaLand needs no introduction. Question now is: does CapitaLand share price offer value? CapitaLand share price is now being traded at $2.75, representing Price/Book Value of just 0.557. This means that the book value should be about $5.00 per share. At current price level, this counter is indeed being traded at a massive discount, no thanks to the COVID-19 pandemic.

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CapitaLand share price

Despite the damaging impact of COVID-19 pandemic, CapitaLand share price has been quite rock solid. If investors look back, this counter has not bombed out to the $1.85 level last seen during the Global Financial Crisis. In fact, the last time CapitaLand share was trading at current level was in 2015. Even during the March 2020 market rout, this counter only tanked to $2.60.

The resilient of CapitaLand share price is attributed to the strong institutional ownership – Temasek Holdings own 52% stake, while Blackrock holds 4.8%. Beyond the solid support from the big boys, I also noticed that ROE has steadily increased from 6.7% in FY2016 to 10.1% in FY2019. The data suggested improving performance of management in growing the company. Of course, FY2020 will see ROE being razed to the ground due to COVID-19 but this will be one-off.

Obviously, it has not been a bed of roses for CapitaLand share price, which has been soft for the past three months since the announcement of scrip dividends for FY2019. A total of 140,343,222 new shares has been issued at $2.767. Due to this, CapitaLand share price dropped from $3.20 on 3 June to the current $2.75.

COVID-19 has caused its CapitaLand Mall Trust and CapitaLand Commercial Trust to record fair value losses of $574 million while income from its associates shrunk $326 million. All these combined to sting CapitaLand share price.

In this article. I will share my insights on the investment merits on CapitaLand and explain why I may be taking a small position in the coming days. 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 to see light soon?

While the recent merger between CapitaLand Mall Trust and CapitaLand Commercial Trust stole the limelight, I view it merely as one of the asset recycling activities, which will unlock value for CapitaLand share price. Furthermore, 42% of the AUM is in China, which is leading the recovery. A stunning 4719 residential units had been sold in Q2 FY2020, representing 300% to that of Q1 FY2020. Even more impressive is that the average selling prices remained at pre-COVID levels.

The signs are certainly encouraging and it seems that CapitaLand share price is poised to [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: September 13, 2020 — 9:44 pm

5 Comments

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  1. Thanks, Gerald, for the article. I agree with you that at the current level around 2.70, it should be worthwhile to accumulate more.

  2. What happen to the stock. Dropping below 2.6.

  3. Hi Shuh Onn,

    Thanks for the query. Will craft a research article on this.

    Regards,
    Gerald
    https://sgwealthbuilder.com

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