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Hot Pick: CapitaLand – 2013 Stock of The Year?
Hot Picks, Tradeable | 09 January 2013
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By: Simeon Ang
Articles (125) Profile

It is the new year and many analysts have been busy sending out research reports seeking to find the next market darling. Broadly speaking however, you will probably be looking at more than a dozen stock picks that analysts have picked out. Instead of investing in all of these stock picks and spreading yourself too thin, why don’t you just look at a few stocks that seem to draw the most nods from most analysts? One of these broadly approved stocks is local property developer, CapitaLand.

Few stocks can boast being approved or having a large group of analysts giving their nod of approval. Below we have a table of the number of Buys, Holds and Sell (in this case, singular Sell call) calls made by analysts.

Source: Factset, table on broker’s recommendation for CapitaLand

As can be seen in the table above, over 71 percent of analysts covering CapitaLand has placed a Buy rating on CapitaLand. And the analysts are not the only ones looking at CapitaLand. Channel NewsAsia forum users have also posted heavily about the stock. Perhaps the most interesting post was the initiating one by senior forum member, Share, who said,

“… and in fact predicting, boldly, that it will (definitely) hit above 5 dollars this year…”

Such a brave statement and with such certainty! Let us see if there is any basis in this statement.

A Change In Captain
A possible and likely reason for this sudden pronouncement online and by various analysts, has its roots in recent news that CapitaLand is undergoing a corporate reshuffling and realignment.

Below is a simple infographic on what was announced by CapitaLand on 3 January 2012.

Source: CapitaLand Press Release, 3rd January 2012

Why is Everyone so Excited?
Corporate reshuffling and management change exercises happen all the time. Seriously, what has gotten investors and analysts so excited about?

As always, the angel (not really a devil this time around) is in the details. CapitaLand has placed under review, several geographical zones as can be seen above. The possible exit from these regions would encompass divestments of several properties. These divestments could be seen as possible short term rewards to investors hungry for fast and safe returns.

In Comes AustraLand Or Out?
In a piece by the Wall Street Journal, Chun Han Wong notes that AustraLand, CapitaLand’s Australian arm, has in “recent weeks become a target for acquisitions by its Australian peers.” CaptaLand’s Australian unit had just rejected a bid by property developer, GPT Group in December 2012 for its commercial and industrial assets. Word on the street has it that real estate company Mirvac Group has just appointed Citigroup as a financial advisor for a possible takeover offer.

Overall, with CapitaLand’s sharpened focus on key markets China and Singapore, many analysts feel that the company could just be able to ride on a wave of optimism. This optimism could stem from various factors including improved sentiment in China’s residential sector, market liquidity in Singapore and healthy reinvestment activities.

How about you? Do you buy into the $5 CapitaLand statement? With this latest development, could CapitaLand finally jump into the spotlight and prove itself as a market darling?

Editor’s note:
Have any thoughts/comments or feedback regarding this article? Reach out to me on my twitter account, @Tradeable. I will also discuss and tweet about various other investment and economic related news in Singapore and beyond, there.

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Simeon, an LSE graduate, is currently the editor of Aspire. He specialises on topics surrounding trading psychology, politics and macroeconomics.

Please click here for more information about this author.

CapitaLand  3.510 -0.03 -0.85%   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More

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The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

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