CapitaLand   

CapitaLand: Too early to bottom fish

Big Push to end at 5.86.... Things that rise fast will fall flat faster...

 

Unlikely from the sub-prime loan, property maybe badly hit. Slow down in economy is bad sign for property. Capitaland has invested in too many part of the world... Maybe badly HIT again .... KO...

 

I see some signs of bottoming out. Acc/Dist and Chaikin increasing.

 

What a gain! From one day losses.... Down 23 cts and up 23 cts... Where is the direction? TA shows down.......

 

I find it strange that this counter performing so badly over last few days. ML report target price was 8.5, and with 70% of assets overseas, i dont see why they have taken such a pounding. any comments

 

WoW...this counter is hit badly...Have been on the down trend for the past 3 days...

It is time to pick up some?

 

Read some brokers' report...it indicates that this counter is worth S$9.45 in a long term. Why is the price easing on a daily basis? anyone keen to comment. Chart shows its currently ranging at support level. Is this the rite time to buy and hope for a raise. The last drop to a low of $7.45 was in about a month, two months ago....anyone keen on this counter pls comment......

 

 

Next few days trading volume and price would provide a good indication on thr trend.

 

What arr you folks guess for Capitaland in near terms, say 3 months?

 

OVER-REACTION from rise in development charges: In light of the rapid rise in land value, the government has decided to reinstate pegging development charge (DC) rates to 70 per cent of enhanced land value from the current 50 per cent. The DC rate was lowered from 70 per cent to 50 per cent in 1985 to avoid eroding the share of value enhancement that accrued to developers in a declining market.

Little impact on developers' existing sites: Only most recently acquired en-bloc sites for which developers have not obtained provision permission are affected. For most cases, only 1-2 sites are affected, and the impact on total development cost is relatively low at just 4-5 per cent.

Developers unlikely to be affected significantly: As always, when there is an increase in development charges, developers are likely to impute the higher development cost when bidding for en-bloc sites. Hence the en-bloc sellers are likely to be the ones who would bear this increase in cost.

Slowdown in en-bloc sales likely: With rising replacement cost for homes and higher development charges, existing home owners are likely to be even more unwilling to put their homes up for en-bloc sales. Any slowdown in en-bloc sales, in our view, will help to prevent the current supply shortage from worsening

 

The Singapore government has raised the capital gains tax on land value appreciation from 50% to 70% yesterday. While the move came as a surprise to the market, it was inline with our view that government intervention risks are high as a result of the very rapid property price appreciation arising from speculation. However, we also view the latest measure (there have been a series of mini measures introduced over the last 6 months) to be ineffective in curbing price appreciation and speculation. In our opinion, demand side measures are generally more effective. As for impact on developers, the new tax is applicable only on projects that have not obtained planning approval, so any land purchased in 2007 could potential suffer from the higher taxes. Finally in terms of developers who have bought most land, it is CapitaLand with about S$2.3bn worth of land, followed by City Development at S$700m.

Development charge raised to 70%. The Ministry of National Development yesterday in a surprise move raised the Development Charge (DC) rates from 50% to 70%. DC is a form of capital gains tax that removes a portion of the land value enhancement as a result of planning approval granted by the authorities. Generally, DC is applicable when the government allows an increase in plot ratio (that allows for greater build-up area), change of land use (e.g. such as from industrial to commercial), or increase in lease tenure (e.g. topping of the tenure to 99 years). The new DC rate is effective from 18th July 2007 for all projects that has yet to obtain provisional planning approval (PPP).

In line with our assessment of intervention. The latest move is in line with our cautious view on the market and that the risks of government intervention are high as a result of speculative activities in the market. But we see the DC increase as another soft measure that the government is placing to warn the market not to be over exuberant on property prices. To recap, some recent government initiatives to try to moderate price increase over the last 6 months include; release of more land supply; releasing more property statistics; re-imposing stamp duty at an earlier stage of property purchases; warning that it is monitoring the market closely etc.

Not effective. In absolute terms, the DC rate hike is marginally and will likely increase the breakeven by 5-10%. We believe the measure is meant more to curb price rise on the HDB heartlands where affordability is more sensitive compared to the prime areas. However in our opinion, the measure is unlikely to curb developer?s hunger for land, especially if they believe prices will appreciate much more. We thus view the ?supply-side? measure generally as being ineffective in speculative market. What is needed are measures to curb speculative demand.

CapitaLand most affected. Generally, it takes about 3 months to obtain PPP post acquiring a land. So developers who have bought land before April 2007 should not be affected by the new DC rates. However, this explicitly assumes that developers are fast tracking the redevelopment of their land purchases and are not land-banking for later redevelopment. In terms of the large 3 developers,CapitaLand has spent most on land acquisition since early 2007, paying about S$2.3bn with estimated DC (pre-DC hike) needed of about S$640m. City Development acquired about S$700m YTD with DC estimated at about S$2-3m. Keppel Land has not bought any en-bloc this year but it has plans to redevelop Ocean Building and it is not certain whether PPP has been obtained.

 

hmm, maybe the new building name Ion... not good, though heard already sold some apartments.

how come the price is not moving? while the rest are moving. hope it is not affected by the development fee....

 

 

Many will be tempted to short this one..

as it has broken down through the major support line...

A juicy one for the big boys?...

 

thank you for all your responses :)

 

 

Hmm since you have shares, that makes no difference if it is contra (shorting) or sell from holding, as if you sell 10 lot from CDP and buy 10 lot today.

Anyway, I believe, the trading house would treat it as a contra (shorting) no payment required.

 

rickytan, i suggest u call your broker and tell him FIFO (First in First Out) else by default it will be treated as a short trade.  Thats my understanding and I stand corrected.

 

technically, i will consider this is shorting.............................

i hv been doing this many times in other counters.................

 

 

I sold at 7.8 and at the end of the day bought at 7.65. Is it considered as shorting ?  I am actually holding shares that have been paid for.

 

 

watch out for this counter tmw...

 

There are good reasons to believe that the selling could be hedging activities by the warrant issuers who need to rebalance their hedge.