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Capitaland is a business you can buy for keeps?

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

  1. What she likes about the business
  2. What she thinks is the value in this business
  3. 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.


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Wednesday 5th of February 2014

HI Kyith, may I ask newbie question, when you specified, "Purchasing at a low of $3.26 would have yielded you an unrealized gain of 534.36% and total dividends of 202.73%". Is the 534.36% based on the peak price of 22 dollars? and for the total dividends how do you calculate the percentage? Appreciate if you can enlighten me as I am learning everyday. Appreciate your help. thank so very much.


Wednesday 5th of February 2014

the price is based on then $9.40, which is far lower than cuurent. so right now the returns is actually more.

you can take a look at my article on keppel in the link above. this is a pic of the then 2011 analysis >


Tuesday 4th of February 2014

This just reinforces my thought of property company not being a good investment. It is difficult for a full cycle property development to be a good investment as it earns good profit during the good years and loses most of it during the bad years. Essentially, the only way to make good money from property development is to go all in when it is good and exit when it is bad. That's difficult as every investor knows how difficult market timing is. If you examine the holdings of Capitaland, you will realize that still plenty of units are stuck in Capitaland's book, such as The Interlace/d'Leedon(these two launched pre-crisis)/Sky Habitat. For property investment, unless substantial leverage is applied, return from properties is really low(around 5%?). People are making good money from properties because either they bought very cheap or they leverage around 4:1 or higher or both. For large property companies such as Capitaland, leverage can't be that high, even 2:1 is considered very high already. Plus, property companies pay the management quite well. We all know that management cost is an important factor when investing into funds or unit trusts or ETFs. The same applies here.


Tuesday 4th of February 2014

hi freedom, happy CNY. i think you summarize it well. A senior investor told me, why would one be interested in Capitaland when its cash distribution in any ways is so low compare to hong kong land.

Sillyinves closely.

Sunday 2nd of February 2014

Properties companies might be worth a closer look If the price continue to head south.

If property counter with sound balance sheet is trading at 50 % NAV, and 34% RNAV, I think it is worth a closer look especially if they had a few good launches and hasn't buy ex land in recent years.

I am not talking about capitaland thou . I Intend to track and look into the details of wingtai and sim Lian more closely.


Sunday 2nd of February 2014

Property is the easiest stock to predict lah. Property or stock market good, they shoot up, and vice versa. Since most of the NAV is in the property, just value the property and cash they have, minus off the loans from the bank. and buy at appropriate MOS and sure to win in the long term when they have new projects, increasing recurring rental income, property disposals, JV, privatisation, etc.

Superbowl and Guthrie are some of the recent shining examples.


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