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CapitaMalls Asia: $2.17 target price?

Sunday, April 10, 2011

I remember that someone told me that DBS Vickers had a target price of $2.51 for CapitaMalls Asia and wondered why the share price of this company has been so weak. Well, valuation is a subjective exercise.

For example, OCBC Investment Research published a report with a target price of $2.17 for CapitaMalls Asia on 7 April 2011. Yes, this was just a few days ago. Does it mean that the share price is going to hit $2.17 in the next few days? It could happen, of course, but I won't bet my bottom dollar on it.

Having said this, it is always good to see what others have to say and OCBC Investment Research did raise some good points:

For CMA, China is the key growth market. CMA has three key operational advantages in China: Firstly, it has the ability to leverage on its extensive tenant network. Second, it has demonstrated diligence and success in using asset enhancement initiatives (AEIs) to grow its net property income (NPI). Thirdly, there would be a trend of decreasing dependence on anchor tenants as malls mature and this would further boost NPI.

CMA’s business model in China is a resilient one due to its focus on mid-high income segment instead of the volatile high growth-high margin luxury segment. While its downside is sheltered, CMA is poised to benefit from the expected steady growth in China’s retail consumption and middle class population.

Read full report here.

Related post:
CapitaMalls Asia: Strong uptrend emerging.

2 comments:

Anonymous said...

I should be celebrating my 1st year being active taking care of my investment. Having being fortunate to have access to these reports, I have noted a very simple trend.

a. These reports rare guns down the company that they are reviewing.

b. If these TP are so accurate, hey, wouldn't those analyst bet their family fortune and make their $$$$$. Better than being a salary-taking person behind that keyboard (rich tai-tai taking job to kill time excluded).

c. More often, a few reading into the targeted company a few reports. Only the initial few lines will matter, the rest are likely to be something that you could have seen from the online financial reports. Plus I got drowned into these numbers.

Lastly, i will believe AK's thinking more than those reports on the views.

Huat ah

SnOOpy168

AK71 said...

Hi SnOOpy168,

Congratulations on your first anniversary. :)

You believe my blog more than the reports by the research houses? I am sure you have over-estimated my abilities but thank you for your encouragement. :)

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