Why did CapitaLand hit a two-month high?

The property developer recently unveiled nearly S$200 million worth of new investments.

  • CapitaLand Ltd (SGX: C31) share price rallies to a two-month high of S$3.78
  • The property group launched a S$50 million innovation fund last Friday (11 June 2021)
  • Its subsidiaries Ascott and Ascott Residence Trust also announced a new joint student accommodation development worth S$146 million this week
  • Analysts see the stock hitting a price of S$4.20 in the next 12 months
  • Ready to trade CapitaLand shares? Open a CFD trading account today

CapitaLand launches new project and innovation fund

CapitaLand’s wholly owned lodging business unit, The Ascott Limited and its hospitality trust, Ascott Residence Trust, announced that they will jointly invest and develop a freehold student accommodation asset located in South Carolina, US, for a total amount of US$109.9 million (S$146.2 million).

Construction of the 678-bed student accommodation, which will serve over 35,000 students from the nearby University of South Carolina, is scheduled to start in 3Q of 2021 and complete in 2Q of 2023.

The property group has also set up a S$50 million innovation fund for the test-bedding of sustainability and other high-tech innovations in the built environment space over the next five years.

This was announced by CapitaLand’s Group Chief Executive Officer, Mr Lee Chee Koon, at the Grand Finale of the inaugural CapitaLand Sustainability X Challenge (CSXC) on Friday (11 June 2021).

The innovation fund is the group’s latest effort aimed at encouraging more sustainable innovation in the built environment space.

In October 2020, CapitaLand opened the Smart Urban CoInnovation Lab at the Singapore Science Park in partnership with the Infocomm Media Development Authority and Enterprise Singapore, with sustainability as one of its focus areas.

As part of the drive, CapitaLand will also redeploy interest rate savings from its sustainability-linked loans towards sustainability initiatives.

What are CapitaLand’s latest analyst ratings and price targets?

The group’s shares rallied as much as 1.35% following the latter announcement, hitting a two-month high of S$3.78 on Tuesday (15 June 2021).

The blue-chip stock currently has a consensus rating of ‘outperform’, alongside an average 12-month target price of S$4.19, based on the latest SGX StockFacts data.

The price target represents a 11.4% upside from its last traded price of S$3.76 a share.

CIMB analysts on 10 June reiterated an ‘add’ rating and target price of S$4.04, naming it among their preferred picks for the property sector.

They stated that they retain a bullish view on the sector, as developers’ valuations ‘still look inexpensive’, currently trading at a 45% discount to RNAV, close to one standard deviation below long-term mean discount.

‘We prefer developers with a high recurring cashflow base and strong balance sheets that would enable them to tap into any opportunities during this slower cycle,’ they wrote in a client note.

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