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CapitaLand Limited - MANAGEMENT REPLY: Why does the direction keep changing?

24/4/2014 – CapitaLand is offering to buy a 34.7% stake in CapitaMalls Asia (CMA) which it does not own at S$2.22/share.

If successful, it will spend about S$3.06 bln on this exercise.

The offer price represents a 23% premium to CMA’s closing price of S$1.805 and a 20.7% premium to CMA’s net asset value (NAV) of S$1.84/share.

Brokers are of the view that the privatisation of CMA will boost CapitaLand's financials.

It also indicates a lack of investing opportunities in the near term.

Hence, research houses Maybank and DBS Vickers maintained their BUY rating on CapitaLand with a target price of S$3.85.

UOB Kay Hian Research also maintained its BUY rating with a target price of S$3.83.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question
Question

1. Why does the direction keep changing?

CapitaMalls Asia Limited (CMA) was the largest IPO in 2009 at S$2.12, raising about S$2.8 bln.

Although the offer price is higher than CMA’s IPO price, the 20.7% premium to CMA’s current NAV is lower than the IPO price-to-book value of 1.5x.

There’s also the sale of Australand mid-March.

Only last year it had sold a 20% stake of the developer, bringing its holding down to 39%.

Even though a strategic review at the beginning of 2013 identified it as a core asset, it then sold the remainder for S$1 bln.

What changed so drastically between board meetings to drive this course of action?

Question
Question

2. Does it believe that CMA was undervalued by investors? If yes, why?

Total number of questions in the full story: 5)


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