CapitaLand Investment shares climb 9% on day two

The property stock, a spin off from CapitaLand Ltd, put in a solid performance on its second day of trading.

  • CapitaLand Investment (SGX: 9CI) share price rallied strongly to a high of S$3.24 a day after its debut
  • The stock, a spin off from CapitaLand Ltd, managed a peak of S$3.01 in its first-ever trading session
  • UOB analysts believe the new entity will provide greater strategic focus for the business
  • Feeling bullish or bearish about the new CapitaLand Investment? Open an account with us to go long or short on the stock today.

CapitaLand Investment stock hits its stride

CapitaLand Investment Limited shares soared nearly 9% on Tuesday (21 September), a day after its debut on the Singapore Exchange Securities Trading Limited (SGX-ST).

The stock, which launched under the code of ‘9CI’, rallied to an intraday high of S$3.22 during its second ever trading session, after launching at S$2.95 a share on Monday.

Shares only managed to hit a high of S$3.01 early in its inaugural session, which was streamed live on Facebook and via a webcast.

The listing takes place from CapitaLand Ltd (SGX: C31), which ceased trading at S$4 a share on 09 September 2021.

The new public entity was the result of CapitaLand Ltd’s restructuring of its business into two distinct entities – CLI, the listed real estate investment management business; and CapitaLand Development (CLD), the privatised property development arm.

CLI had about S$119 billion of real estate assets under management (AUM) as at 30 June 2021, of which more than 80% are located in Asia. CLI’s real estate funds under management (FUM) also stood at about S$83.0 billion, held via six listed real estate investment trusts and business trusts, and over 20 private funds.

How do analysts feel about CLI’s prospects?

UOB analyst Adrian Loh said he likes CLI ‘for its scalability through fee-related earnings and growth potential in its funds management business’.

He also established a sum-of-the-parts valuation for the company of S$3.64. This implied a 28.9% upside from CapitaLand’s own 1x P/NAV valuation of CLI of S$2.823 which it used as part of the valuation consideration during the scheme of arrangement to delist.

Looking ahead, Loh believes the new CLI structure will help the group to sharpen its strategic focus.

‘The privatisation of CAPL’s capital-intensive development business will allow it to focus on developing longer gestation projects and incubating new businesses that require more “patient” capital,’ he said in a note on 17 September 2021.

‘In addition, the company believes that listing its investment business will increase scalability through Fee Related Earnings (FRE) and Funds Under Management (FUM) growth.’

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