Sunday, December 23, 2007

CAPITALAND shares have endured a turbulent journey

CAPITALAND shares have endured a turbulent journey of late, and this week was no different.

The property stock plunged from $7.05 on Tuesday last week to as low as $5.85 during intra-day trade this week amid heavy volume.

Unlike in the previous week, when the daily volume never exceeded 17 million units, the daily volume remained above 21 million this week.

The stock closed five cents up at $6.15 yesterday - down 45 cents for the week.

Real estate investment trusts, or Reits, associated with CapitaLand also went south this week.

CapitaMall Trust fell to as low as $3.10 on Tuesday before it rebounded to end flat for the week at $3.30, while CapitaCommercial Trust dropped seven cents to $2.36.

Shares of CapitaLand were worst-hit on Monday, when they fell 50 cents to $6.10 - their lowest close so far this year.

Strong selling pressure triggered by an 11 per cent fall in Australia’s property trust index caused that day’s plunge.

That came amid news that Centro Properties, an Australian property trust that owns 700 United States shopping malls, had problems refinancing its debts.

Centro shares plunged 76 per cent on Monday after the firm said it was struggling to refinance $1A.3 billion ($1S.9 billion) worth of maturing debts because of the collapse in the US sub-prime housing market.

There are, however, signs that the worst might be over for CapitaLand.

An AmFraser Securities report on Tuesday said: ‘These two days could well mark the selling climax for CapitaLand, which lost 17 per cent in the past week, falling from $7.05 to a new 2007 low of $5.85 today.’

That seems true, with the shares staying above $6 since Tuesday.

In a show of confidence, UBS maintained its ‘buy’ call, while keeping its target price of $10.60 that same day.

A UBS report says CapitaLand still enjoys strong access to capital. It also doubts whether the property firm will face the same debt problems as Centro since ‘it has not overextended itself’.

But OCBC Investment Research kept its ‘hold’ rating, while slashing its price forecast from $7.83 to $6.94.

It noted: ‘As for its recent results, though headline numbers were strong, this was due mainly to one-off items.

‘Excluding these one-off items, we estimate that its profit after tax and minority interests would have been more modest at about $34 million.’

Source : Straits Times - 22 Dec 2007

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