I have a friend asking me whether can we buy Capitaland. Perhaps she is interested in Capitaland as the price is cheaper than a few months ago.
To be honest, I am not sure. I am rather shitty with property stocks.
And on this occasion I do not know
- What she likes about the business
- What she thinks is the value in this business
- What is the kind of payout she is looking for as an investor
Your timeframe, your knowledge of this Capitaland ‘black box’ derives the game plan for this stock, whether you are trading or buying the business.
Perhaps if you are prospecting the business as a trade, you should look at the longer time frame as a perspective.
Uncle CW8888 at his blog came up with this proprietary chart. Do visit his site if you want updates on DBS, Capitaland, Keppel and Semb Corp
Wow that is volatile. My thoughts is this: Since 2000, we have the best bullish property building cycle due to cheap money, a major south east asia property company should do well.
There are no excuses not to. Perhaps that is why Capitaland have such a great mindshare amongst investors.
Everyone look at the malls and the housing projects they garnered, and believe that even though the price has gone down, it HAS to come back.
How well is a long term investor compensated?
(Click to see larger table)
My time period is close to uncle CW’s. What happens if an investor puts in 1000 shares in 2001? That is 13 years.
There are 1 rights issue and 1 time where Capitaland gives shareholders 1 CapitaCommercial Trust shares for 5 Capitaland shares they have.
Excluding this, you would have a 13.42% unrealized Capitaland gain, and dividends of 33.63%. The total gain is 47.05% with dividends making up 71%
Annualized over 13 years, the compounded average growth rate is 3%.
That’s not too bad isn’t it? But that is during the best time for the business and this is the total return?
To a lot of people this looks more like a trading stock.
But lets contrast it to another uncle CW favorite blue chip, Keppel Corp. Rather volatile as well.
Purchasing at a low of $3.26 would have yielded you an unrealized gain of 534.36% and total dividends of 202.73%.Annualized unrealized gain is 18% and dividend collected is 10%.
For more commentary on this, do take a look at the article here: Keppel Corp: Lumpy Cash Dividend
I also neglect to compute the return you get from CapitaCommercial (I am lazy)
Well, it ipo at $1.13 so your 200 shares will get you $226. The current price $1.42, so the value is $284. So that’s like a 9.4% current return on that original $3000. I didn’t compute the dividends you will received from CapitaCommercial (I am lazy again)
Worth to buy? I haven’t gone into the business or the valuation aspect of this company. I am probably not enticed to take a deeper look.
Find out why you want this business or stock. If it is business, then a lot of what I show here is irrelevant, you shouldn’t look at the historical price at all.