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Thanks for the wonderful analysis. I'm vested in CapRChina. Just curious, if CMA manages to price its shares at 1.5x bv, wont that be a boon to caprchina and capitamall, especially for caprchina, as the assets in CMA is largely in china. considering CaprChina's bv of $1.13 as of sep 2009, a 1.5x bv would lead to a price of $1.70. Given the disparity, CMA would not be as appealing as CapRChina, given the higher valuations of CMA's share 1.5x bv. Hence, the funds will shift back to capitamall and caprchina. Both stock are trading around bv now. Just my view for sharing :) welcome any comments.
rutheone1905 ( Date: 05-Nov-2009 10:23) Posted:
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For those holding on to CMT take note the arrival of CMA:
Capitaland plans to float a stake in its integrated shopping centre business under CapitaMalls Asia (CMA) by the year-end could add handsomely to CapitaLand's fourth-quarter and full-year bottom lines.
CMA has a net asset value of $5.3 billion but assuming that its assets are valued at 1.5 to two times book value during the initial public offering (IPO), the total market worth of CMA would be about $8-10 billion. If CapitaLand floats a stake of 30 per cent, the pre-tax profit that it stands to book from the IPO could be in the order of $800 million to $1.4 billion.
CapitaLand's management has indicated that the board may consider recommending a special dividend to shareholders following CMA's flotation.
UBS Investment Research, in a recent paper, estimates that assuming an $8 billion valuation for CMA and a 30 per cent free float, the special dividend would work out to 27 cents per CapitaLand share if it decides to pay out 50 per cent of the IPO proceeds, and 54 cents per share assuming a 100 per cent payout.
On a $10 billion valuation for CMA and a 40 per cent free float, the payout could range from 45-90 cents per share.
Since CapitaLand announced its plans earlier this month to float CMA, its share price rallied about 21.5 per cent to a high of $4.46 on Monday, although it has given up much of the gain, ending at $4.15 yesterday.
By UBS's calculations, an $8-10 billion valuation for CMA will add 61 cents to $1.06 to its revalued net asset value (RNAV) per share for CapitaLand, which it estimates at $4.30 based on CMA's $5.3 billion book value. By launching an IPO, a higher value will be placed on the CMA business than if it remained as an unlisted part of CapitaLand. Or as CapitaLand's management has put it, its plans to float CMA will 'unlock shareholder value by crystallising the value of CapitaLand Group's integrated shopping mall business'.
CapitaLand shareholders stand to gain by approving the group's plans to float CMA. No doubt it will also be good for members of its management, whose pay packets should benefit from a stronger bottom line. And not to forget JP Morgan, the sole financial adviser.
However, some CapitaLand shareholders may also hold stakes in CapitaMall Trust (CMT) and CapitaRetail China Trust (CRCT), which many analysts reckon may fare less favourably after CMA is listed.
CMT may face short-term price weakness from asset reallocation to CMA, as UBS says. The process has already begun. CMT's unit price has slipped from $1.82 before the announcement on CMA to yesterday's closing price of $1.60.
CMA, with a portfolio of 86 malls in China, Singapore, Malaysia, Japan and India, may be more appealing to investors than CMT - which has a presence only in Singapore. CMA's free float market cap could rival CMT's. Still, CMA could find it worthwhile to sell assets, such as its 50 per cent stake in ION Orchard, to CMT given the tax transparency that CMT, as a real estate investment trust (Reit), enjoys in Singapore. In other words, if ION remains in CMA, the income from the mall will be taxed at the corporate tax rate (at the vehicle or CMA level). If however, ION is sold to CMT, the mall's income will be exempt from payment of corporate tax at the Reit/vehicle level, under the tax flow-through allowed for Singapore Reits.
So CMA will retain an incentive (from the viewpoint of this tax saving at least) to develop, warehouse and sell assets to CMT - pretty much the arrangement that now exists between CapitaLand and CMT.
However, this may not be the case for CRCT. That's because CRCT does not enjoy tax transparency since its income is derived from the ownership of malls in China, where it has to pay taxes on the income before it can bring it to Singapore.
This being the case, there could be less incentive for CMA to offload its China malls in future to CRCT. In fact, it may diminish or extinguish the raison d'etre of CRCT.
When CapitaLand floated CRCT in December 2006, it had planned to grow its initial $690 million portfolio of seven malls in China to $3 billion by end-2009. So far, it hasn't been very successful. Today, its portfolio comprises eight malls worth $1.2 billion.
Who knows, CapitaLand could eventually privatise CRCT and let its China malls business sit entirely in CMA. This could provide a nice exit for CRCT shareholders.
These are some questions that CapitaLand shareholders who also own units in CMT and CRCT may ponder as they vote tomorrow on CapitaLand's plans to float CMA
This year, both parent and kids (CapitaLand, CapitaMall and CapitaComm) had raised so much cash through rights issues. Now CapitaLand is aiming to raise another US$2 billion before the year is over.
What are they going to do with all the cash raised?
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* Sets price range of $1.98-$2.39 a share: email SINGAPORE - CapitaLand's Asian shopping malls unit is looking to raise about US$2 billion in its Singapore initial public offering, a move that will help boost the warchest of Southeast Asia's biggest property developer. CapitaLand will float a 30 per cent stake in its wholly owned unit CapitaMalls Asia Ltd, which has 86 retail properties valued at around $20.3 billion (US$14.5 billion) in Singapore, China, Malaysia, Japan and India. The listing move comes at a time when the pipeline for new offerings is becoming crowded and a string of Chinese real estate IPOs have received a lukewarm response from investors. Malaysia's Maxis is trying to raise US$3.7 billion in its initial public offering in Kuala Lumpur, the biggest in Southeast Asia for more than a decade. In Hong Kong, Longfor Properties is seeking to raise US$916 million a few days after Evergrande Real Estate Group raised US$729 million in its scaled-back IPO. Also, shares of department store chain Myer Holdings Ltd tumbled as much as 9 per cent on their debut on Monday in its US$2 billion float, Australia's biggest in two years. Analysts said the listing of the unit will boost CapitaLand's ability to buy and build more property assets in Asia. CapitaLand wants China to account for 35-45 per cent of its assets from 28 per cent now, and is seeking to increase Vietnam's share to 5-10 per cent of assets. Not cheap? 'We like the stock that comes with the pan-Asia theme. The way it's structured gives investors cashflows from the developed malls and upside from the greenfield projects,' said Neo Chiu Yen, equity research asia, ABN Amro Private Banking. 'But the pricing looks a bit 'full' to me. It won't be cheap, but it should give investors some incentives to participate.' Management roadshows are planned between Nov 3 and Nov 16 and pricing for the international tranche of the offering is due on Nov 16, the email said. The Singapore public offer period is between Nov 18 and Nov 23. Listing will likely take place on Nov 25, the email said. 'Our strong financial position and capital structure will provide us with the financial flexibility to fund our growth and expansion,' the CapitaMalls prospectus, filed on Monday, said. 'These opportunities include acquisitions of land for greenfield projects, brownfield projects and completed malls, asset enhancement initiatives and other merger and acquisition opportunities in Asia.' JPMorgan is the sole financial adviser, and issue manager with DBS. The two banks are also bookrunners with Deutsche Bank and Credit Suisse, according to the prospectus. Shares of CapitaLand were down 0.7 per cent at 0427 GMT. -- REUTERS Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved. |
Calculation ( Date: 03-Nov-2009 01:00) Posted:
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Just announced that it would be meeting with institutional investors to test the offer price and size.
bola_no1 ( Date: 03-Nov-2009 00:42) Posted:
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OCT 14 capital group company juz bought in 30810 lots on tis baby.It is for long postion.dun't understand why???
ktchua ( Date: 28-Oct-2009 22:32) Posted:
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Ok noted. N Thanks bikerlover fr the info.
bikerlover ( Date: 18-Oct-2009 23:30) Posted:
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It want to list CapitaMall Asia to raise more cash, so i also think that it's unlikely to delist Capitamall.
But with the surplus IPO money, maybe it will delist it???
dealer0168 ( Date: 11-Oct-2009 22:11) Posted:
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It seems like not only CapitaMall may be delisted. Seems like some others also affected. Correct me if i interpret wrongly.
Emm can provide the exact few that might be affected.
Calculation ( Date: 11-Oct-2009 21:55) Posted:
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CapitaLand's stake in CapitaMall will be held through CapitaMall Asia; the latter will then issue shares to the public so as to be listed on the Stock Exchange. CapitaLand has said it would keep a controlling interest in CapitaMall Asia.
On the point of whether CapitaMall will be delisted, I personally doubt CapitaLand will want to put in that huge sum of cash (assuming it has).
bikerlover ( Date: 11-Oct-2009 16:23) Posted:
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yesterday this share went down and up so much... now it like no movement...