Tuesday, May 30, 2006


The news of Las Vegas Sands getting the Marina IR bid really give a big blow to both Government Link Comapnies (GLCs), Capitaland and Keppel Land.

I shall only talk about Capitaland in this post.

Capitaland fell to $4.10 on Monday following the news of the IR bid that was release last Friday after the market closed. Based on this price, it was at a P/E ratio of only 14.5 and a discount of 19.6% compare to its high of $5.10 2 weeks ago. Does it deserve such a drop because of losing an IR resort?

Other than being short sighted and only seeing Capitaland's loss in the IR bid, these are some points you might want to consider.

1) It was at a P/E ratio of about 28 last year before the property boom this year. Valuation wise, it was half as cheap now.

2) It posted record profit last quarter.

3) Got into a Joint Venture (JV) with India's local shopping mall operator

4) Aggressively developing residential projects and acquiring shopping malls in China.

China property market is booming with 35% increase in residential property prices in Shenzhen and 15% in Beijing. However, there is a risk that China might revise its policy to curb the surge in property prices. For full details, you can look at today's Business Times.

This isn't enough for a research on the fundamentals of the company, but hope this will provide a guideline to what to research on (other than all the seemingly good points, you might also want to find out what is the risk involve in India and China market).

I will continue to post the fundamentals of Capitaland if time permits.


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