CapitaMalls Asia

[Musicwhiz]

Just to share an article from The Edge Singapore.

(Not Vested)

[freedom]

actually, I think it is a better strategy to divest the malls into PE funds rather than REIT yet. CMA has 45% interest in PE fund, so it still enjoys much higher return from the divested malls and the malls divested still have quite some room to grow, e.g. yield on cost of around 10%. When there is no much growth for the malls and CMA wants the money, it will divest into REITs.

[steven]

[Image: charts.pl?id=JS8.SI&type=si_factsheet_ch...&draw=line]

[freedom]

a re-look of CapitaMalls Asia, I realized that the average ROE over years should be quite low. 10 - 15% maybe.

the investment in reits/funds is already leveraged, so I doubt any financial institutions will give too much leverage for CapitaMalls Asia for its investment in reits/funds as collateral. the average return of this part of equity is just around 10% only.

the return on fund/mall management should be very high, but the equity part is too small (100 - 200 million), to make a much difference for the total equity of (5 - 6 billion).

the mall development/owning part. As shown in Chinese retail mall development, it took too long to mature a mall. So it will reduce the return on investment. Also, CapitaMalls Asia did not exactly buy land at the bottom of the cycle, e.g. its recent purchase of Luwan, Bedok, Jurong Gateway, even its purchase of Ion site, not at the bottom either. So difficult to have a decent return. The owning part, the retail asset yields quite low, maybe 5% - 7%. even with 1:1 debt/equity leverage, the return might be just around 10 -15%.

The return is getting lower also because CapitaMalls Asia should be in a net cash position most of the time. During 2008 - 2009, Capitaland had to do a right issue on itself to make sure it can help its reits succeed in their cash calls. If CapitaMalls Asia does not want the same fate, it should reserve certain amount of cash for it. Of course, the cash return should be very low.

given the average ROE of CapitaMalls Asia, it is difficult to get a high PB, maybe 0.5 - 2. Maybe buy it at discount to its book value and sell when PB is around 2, to make it a successful trade.

[egghead]

I could not resist the price and took a small position at $1.335 yesterday which is about 12% discount to book. The Capital Group is now holding <5%.

[Zelphon]

I could not resist the price and took a small position at $1.335 yesterday which is about 12% discount to book. The Capital Group is now holding <5%.

LOL...Same here... I also took a small position yesterday at $1.335..

Good luck to us all !!!

[freedom]

The capital structure of capita family already showed its weakness during weak time. The investments in REITs would count as part of assets in good times, but almost full liability in bad times.

if something like 2008 - 2009 were to happen again and assets were to deflate, would the net cash position of CapitaMalls Asia be enough to help all its reits (CapitaMall/CapitaRChina/CapitaMalls Malaysia) fund their debts?

[momoeagle]

CIMB - CMA will be acquiring the remaining 50% stakes in Minhang Plaza and Hongkou Plaza in Shanghai for S$949m, valuing the assets at Rmb23k psm and Rmb31k psm respectively. Passing yields for Minhang Plaza are 4.5-5% while the group has a minimal target of 4% for Hongkou Plaza. We see positives from higher rental income and increased exposure to primes malls in Shanghai. What is more muted is immediate upside to RNAV. CMA trades at 0.8x P/BV, which we believe adequately values the stock in light of: 1) weakening macro conditions; 2) a lengthy yield gestation period; and 3) selling pressure from a major shareholder. On these accounts, we lower our target price from S$1.66 to S$1.36, now based on a 30% discount to RNAV (20% previously). A reversal of any of the above concerns could form re-rating catalysts, we believe.


As usual, CIMB is a good reverse indicator again LOL

[yeokiwi]

CMA will invest USD262.6 million (approximately S$316.0 million1) in Full Grace through a
combination of subscription of shares and shareholder’s loans. The total investment amount
was arrived at after taking into account among other factors the independent valuation of
Minhang Plaza and the net asset value of Full Grace. The latest valuation of Minhang Plaza
as at 30 June 2011, commissioned by CMA and conducted by DTZ Debenham Tie Leung, is
RMB3,386 million (approximately S$632.5 million2) (based on completed condition on a 100%
basis).
CMA will invest USD526.4 million (approximately S$633.7 million1) in Ever Bliss through a
combination of subscription of shares and shareholder’s loans. The total investment amount
was arrived at after taking into consideration among other factors the independent valuation of
Hongkou Plaza and the net asset value of Ever Bliss. The latest valuation of Hongkou Plaza
as at 30 June 2011, commissioned by CMA and conducted by DTZ Debenham Tie Leung, is
RMB6,842 million (approximately S$1,278.1 million2) (based on completed condition on a
100% basis).

There is still another joint development at Jurong East that costs S$1.5 billion i think.
Will they resort to right issue or share placement?

[freedom]

CapitaMalls Asia to invest substantial amount of money now into China market, does show that they are not good investors. At least they should wait for blood in the street, then invest. There will be plenty of projects available at much cheaper price. And CapitaMalls Asia invests now, they will not have money to invest when everything is cheaper....