Where next for CapitaLand following loss guidance?
CapitaLand shares fell over 6% at the start of the week, after the group provided an underwhelming profit guidance for FY2020.
- CapitaLand Limited’s (SGX: C31) share price fell 6.4% this week, after the group said it expects a full-year loss for FY2020
- CapitaLand predicts losses in the range of S$1.55 billion to S$1.65 billion, versus a gain of S$674.8 million in FY2019
- The company will report its 2020 financial results on 24 February 2021
- Earlier this month, CIMB analysts gave an ‘add’ call on the stock, while OCBC and RHB rated it a ‘buy’
- Trade CapitaLand, long or short, with an IG account today
CapitaLand share price: what’s the latest?
Real estate developer, CapitaLand’s share price has fallen as much as 6.4%, since it said last Friday (22 January 2021) that it is expecting to post a full-year loss for FY2020 in next month’s report.
This is compared to a profit in the 2019 financial year, largely due to an impact from revaluations and impairments, the group noted in its latest profit guidance.
As at 12:00 SGT on Wednesday (27 January 2021), shares continue to trade 5.5% lower than before the announcement at S$3.25 each.
Losses to be in the range of S$1.55 billion to S$1.65 billion
Based on indicative values, CapitaLand expects fair value losses on a portion of the group’s portfolio of properties to be in the range of S$1.55 billion to S$1.65 billion, as compared to a gain of S$674.8 million a year ago.
The company also expects to recognise higher impairment losses in the range of S$800 million to S$900 million in FY2020, versus FY2019’s S$31.6 million.
Operating profit after tax and minority interests (PATMI) is expected to reduce by 20% to 30% from S$1.06 billion recorded in the full year ended 31 December 2019.
Meanwhile, cash PATMI (comprising operating PATMI and portfolio gains) is expected to reduce by 35% to 45% from the S$1.49 billion achieved in 2019.
The group did state that it’s overall business and financial position remains ‘resilient’, notwithstanding the full year loss. It expects to deliver healthy cash PATMI for FY 2020, which will continue to support its dividend policy’.
CapitaLand will be releasing its 2020 financial results before the start of trading on 24 February 2021.
Where next for the CapitaLand stock?
CapitaLand currently has an average rating of ‘outperform’ and 12-month target price of S$3.726, according to the latest data from SGX StockFacts.
CIMB analysts on 15 January gave an ‘add’ call on the stock and a target price of S$3.42 a share, which represents an upside of 5.3% from its last traded price.
They named CapitaLand among their preferred property picks, stating that they expect volume demand to remain stable in 2021, at between 9,000 units to 10,000 units.
Additionally, they forecasted that private home prices will rise by ‘a slightly better 0-5% for 2021F, thanks to robust demand’.
‘Overall, we expect prices to pace economic recovery as developers continue to price their projects competitively in order to move inventory,’ the analysts wrote.
They further noted that the group’s ‘strong capital recycling and deployment into new investments would continue to drive its return on equity’.
Meanwhile, OCBC and RHB’s research teams both rated the CapitaLand stock a ‘buy’ alongside an identical price target of S$3.75 on 05 January and 04 January respectively.
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