Pan Asian diversified player

Trading at steep 46% discount to asset backing

deployment to underpin forward earnings growthOngoing residential activities and recent capital

Robust balance sheet with a low gearing

Attractive valuations backed by diversified portfolio.

Capitaland is trading at 0.89x P/BV and a steep 46%

discount to our RNAV estimate of $5.42, indicating that

much of its funds and serviced residence management

business and future development profits have not been

priced in. The group’s value proposition lies in its multisector,

multi-geographic business model that allows them to

tap into Asia’s high consumption growth story. At this level,

we think that share price has factored in much of the policy

headwinds in Singapore and China residential sector. Our

target price of $4.34, pegged at 20% discount to RNAV,

offers investors a 48% upside. Near term catalyst lies in its

ability to deploy its balance sheet capacity accretively.

Residential activities to underpin near term outlook.

The group is on track to market 1,700 units in Spore from

The Interlace, d'Leedon and a new project in Bedok. It is

also expanding the oversea portfolio, particularly in the

value home segment in China and Vietnam, where

10,000-15,000 affordable housing units will be built over

the next 3-5 years. To accelerate its expansion, the group

had recently acquired a 40% stake in Surbana Pte Ltd,

with expertise in this area. Meanwhile, recent capital

deployment exercises such as the redevelopment of Market

St Carpark and purchase of a 20% stake in the Jurong

Lakeside white development site will also drive earnings in

the longer run.

Robust balance sheet

This will allow the group to capitalize on any opportunities

that might arise on the back of policy tightening measures

across Asia.. The group has a net debt/equity