This is my personal opinion on CapitalMallAsia.

It's a SHORT SELL target!

 

Check chart >>>  http://volume-price-spread-for-metastock.blogspot.com/2011/01/powerful-scanner-picked-up.html

 

Personal blogsites:
Http://chartfreely-sg.blogspot.com
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http://volume-price-spread-for-metastock.blogspot.com/

Youtube Videos:
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http://www.youtube.com/watch?v=nlNL8hCxq3E
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Stores of value – where are they?

CapitaMalls Asia (CMA SP, S$1.91, OW)

CapitaMalls Asia’s shares have de-rated significantly in the last 3 months on the

back of concerns arising from the potential listing of alternative China retail real

estate vehicles that could compete more intensely in the direct property level as well

as in the capital markets, a longer than expected gestation period for the group’s

China portfolio and major shareholders rebalancing their position.

Whilst we believe that operating environment will continue to remain challenging

and so is the competition in the capital markets, we think CMA's asset value is well

under appreciated, especially in its China segment. More importantly, with most of

the 2nd and 3rd tier city malls coming out of its first rental reversion cycle and

substantial amount of 1st tier malls to be completed in the next year, we are likely to

see a J-curve earnings trajectory for the group's China portfolio.

CMA in China - at the heel of the hockey stick

We believe that the performance of CMA's China portfolio has been one of the key

dragging factors for the group's share price performance, especially when the

market's heightened expectation about returns in China was met with little

contribution due to longer than expected gestation period and a rather chunky fixed

cost base. As the group moves into its 5th year of mall operations in China, we

expect a number of the 2nd and 3rd tier city malls to come out of their first rental

reversion cycle and to register strong rental reversions. The completion of a couple of

1st tier city malls in the coming year would also help to add to the bottom line in a

substantial way.

Whilst rental earnings contribution might still be modest in 2011 as a result of preopening

charges and large fix cost base, we expect earnings from China to more than

triple by 2012 as a result of stronger rental contributions and the operating leverage

embedded in the business. In addition, strong revaluation gains for the next couple of

years would also add to the group's bottom line. We estimate a 3-year earnings

CAGR of 23%.

CMA under-valuation

We believe CapitaMalls Asia is undervalued, currently trading at 1.1x FY11E book,

11x FY11 reported P/E and 31% discount to our SOTP valuation of S$2.75/share.. In

fact, we estimate that the stock is currently trading at 15% discount to its tangible net

asset value, pricing in zero valuation for the group's funds management business

which has almost S$13bn AUM under management and zero valuation for the

platform and its potential to scale up even further. For a detailed analysis of CMA,

please see our report dated 21 January 2011 entitled “At the heel of the hockey stick”.

Table 2: CapitaLand: Singapore comparative valuations

As indicated

Price Price Market RNAV Prem/Disc

to RNAV

Core

P/E

BV P/B Gearing ROE

Rating target Cap Forecast Forecast FY11E FY11E FY11E FY11E FY11E

(S$) (S$) (S$ MM) (S$) (%) (X) (S$) (X) (%) (%)

Allgreen UW 1.14 1.13 1,797 1.59 -28.8% 13.8 1.62 0.70 47.7% 5.0%

CapitaLand OW 4.60 3.68 15,686 5.71 -35.4% 19.2 3.67 1.00 27.8% 9.4%

City Developments N 14.00 11.84 10,766 14.75 -19.7% 15.6 8.18 1.45 27.0% 9.3%

CapitaMalls Asia OW 2.60 1.92 7,457 2.59 -25.9% 31.3 1.58 1.21 -8.5% 4.5%

Not to worry about falling to $1.85 as volume has been thin, STI fallen for few days and price stabilizing around $1.91.

I think if short sellers in most counters are beginning to get cornered next week, this counter have a possibility of just staying around this level.

I sold 30 lots at $1.95 and bought back 10 lots at $1.90. Still waiting to buy back another 20 lots if drop lower.

After the marriage wayang yesterday, volume has dropped today. Whatever had to be done yesterday are already done deals. Today see situation revert to normal.

What directions the stock price will take tomorrow onwards really depend on market sentiments on the property front.

Any new property acquisitions by the company during this period of high property prices means a longer digestion period. But surely nothing can go wrong if company acquisitions are long term.