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Broker's take: OCBC keeps 'buy' on CapitaLand, with fair value at S$3.68 a share

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CAPITALAND remains a "buy", OCBC Investment Research said on Wednesday after the Singapore property group posted a 35.4 per cent increase in net profit to S$218.3 million for the first quarter ended March 31, 2016.

Analyst Eli Lee has pegged CapitaLand's fair-value estimate at S$3.68 a share.

At 12.07pm, CapitaLand was trading at S$3.20 a share, down two cents, or 0.62 per cent. More than three million shares changed hands.

Early on Wednesday, CapitaLand said excluding gains from the change in use of its properties, operating net profit grew 10.6 per cent from a year ago mainly due to higher contributions from China development projects, new contributions from CapitaGreen, and improved operating performance from its retail and serviced residences businesses.

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Revenue dipped 2.3 per cent to S$894.2 million mainly due to the absence of a fair-value gain of S$59.6 million arising from the change in the use of Ascott Heng Shan Shanghai in Q1 2015, and lower contributions from the group's development projects in Singapore and Vietnam.

"Overall, we judge this quarter's numbers to be broadly in line with expectations," Mr Lee said.

He noted that the group's Chinese home sales continued at a healthy clip with 3,377 units sold in Q1 2016, up a whopping three times versus 1,306 units in Q1 2015, while operating performances at its Chinese mall portfolio remained steady with Q1 2016 tenant sales and same-mall NPI (net property income) growth up 1.0 per cent and 7.0 per cent year on year, respectively.

"Maintain BUY with an unchanged fair value estimate of S$3.68," he concluded.

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