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Is CapitaLand worth S$4.11 a share?

Analysts believe that the real estate stock has more room to grow in the next 12 months.

  • CapitaLand Ltd (SGX: C31) share price hits S$3.74 on Thursday (29 April 2021)
  • The property group is acquiring its first hyperscale data centre, located in China, for an estimated S$760 million
  • Separately, it announced that Mr Lucas Loh will relinquish his role as China president
  • Analysts see a 10% upside on the stock
  • Buy and sell CapitaLand shares with an IG account

CapitaLand share price: what’s the update?

CapitaLand announced that it will acquire its first hyperscale data centre campus in China for an amount of 3.66 billion Chinese yuan (S$757.7 million).

The property developer is acquiring the data centre campus from AVIC Trust, an investment arm of Shanghai-listed AVIC Capital, and from an unrelated third-party vendor, it said on Wednesday (28 April 2021).

The group’s shares are up slightly by 0.54% on Thursday (29 April). Nearly four million securities have exchanged hands on the counter as at 14:50 SGT.

The blue-chip stock currently has a consensus rating of ‘outperform’, alongside an average 12-month target price of S$4.11, based on the latest SGX StockFacts data.

The price target represents a 10% upside from its last traded price of S$3.74 a share.

CIMB analysts on 15 April rated the stock an ‘add’ with a target price of S$4.04, while UOB gave a ‘buy’ call with a S$3.81 price estimate.

Acquisition in line with 2030 Sustainability Master Plan

The acquisition, expected to be completed by the third quarter of 2021, will be via the purchase of 100% equity interest in two companies registered in China. China is the world’s second largest data centre market and the largest in Asia Pacific.

Located in Minhang District, an established data centre hub in Shanghai, the operating data centre campus serves two of China’s largest telecommunications companies. The hyperscale data centre campus comprises four buildings with a gross floor area of up to 75,000 square metres and up to 55 megawatts of IT power capacity.

The group said in a press release that its decision to expand into new economy assets such as data centres, ‘capitalises on the increasing global connectivity and demand for data which has accelerated amid Covid-19’.

It hopes to ‘grow its data centre portfolio into a global business by leveraging its in-house data centre design, development and operational capabilities’.

This latest acquisition is also in line with CapitaLand’s 2030 Sustainability Master Plan, as the data centre campus adopts sustainable design principles and green building standards.

Senior management changes at CapitaLand China

Separately on Tuesday, the company also announced that Mr Lucas Loh will relinquish his role as its China president, effective from Wednesday.

Mr Loh will now take on an advisory, non-executive role as CapitaLand's China chief representative.

Mr Jason Leow, currently the group's Singapore and International president, will take on the oversight responsibilities for the group's development-related projects, including those in China, said CapitaLand in a Singapore Exchange filing.

Mr Loh was appointed the group’s China president in September 2018, and has been leading CapitaLand's business there, as well as driving growth in its investment management business.

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