Why I Bought CapitaLand (C31) Recently


Recently, I added around $2,600 worth of CapitaLand (C31) shares at $2.90 to my investment portfolio. I feel it is currently very undervalued and it is a good combination of a dividend and value stock currently.  CapitaLand is Asia's largest diversified real estate group and it has a large portfolio of properties and various REITs valued at more than $100 billion. It has a market capitalisation of $15 billion and is considered a blue chip stock that is included in the Straits Times Index Exchange Traded Fund (STI ETF). In my opinion, I feel that it is currently trading at a massive discount below its fair value of around $3.90. You can check out the various banks' fair value estimate of CapitaLand (C31) here. Here's my analysis of why I think CapitaLand (C31) is a good buy at its current price. 

 

Low Price to Book (P/B)

CapitaLand has an attractive P/B ratio of 0.62 at its current share price of $2.86. The P/B ratio is used to measure the company's market valuation to its book value. The book value refers to the net asset value of a company and is calculated by using total assets - total liabilities. A P/B ratio under 1 is typically considered a good investment and is a ratio that is used by value investors to identify potential companies that are undervalued currently by the market. You can find more in-depth information on the P/B ratio here.



Increasing Earnings Per Share (EPS) and Revenue

CapitaLand has historically been under excellent management that managed to improve and expand the company continuously since its beginning. This can be seen through its constantly increasing revenue and earnings per share. Earnings per share is calculated using a company's net profit divided by the number of shares outstanding and is a good way to determine a company's profitability. Increasing earnings per share is a good indicator that the company is performing well and is good news for the shareholder. CapitaLand earnings per share have increased consistently from 25 cents in 2015 to 46.4 cents in 2019 and its revenue has also increased from 2015 to 2019. This shows that CapitaLand is increasing its profitability consistently each year and is a good sign of a strong company. 



Proven Dividend History

CapitaLand has a consistent dividend history of 19 years and their average dividend yield for the past 5 years is 3.85%. This means that they have been paying out dividends to shareholders consistently without fail for the past 19 years at a regular interval. Although the dividend yield may seem low compared to REITs, the combined potential capital appreciation you can achieve at its current share price makes CapitaLand an extremely attractive stock to purchase now. At its current dividend yield of 4.2% for this year, I will receive around $100 in dividends in August. 



Strong Balance Sheet

A strong balance sheet is when a company has more total assets than total liabilities. CapitaLand has managed to keep a strong balance sheet consistently where its total assets far outweigh its liabilities each year. Furthermore, CapitaLand has developed a strategy to actively divest some of its properties and acquire new profitable assets each year to increase its total net assets while keeping its liabilities low. The management of the company has shown that it is heading in the right direction and is clear of the company's financial goals. CapitaLand's strong balance sheet further solidifies its position as an undervalued stock at its current share price. 

 

Data were taken from CapitaLand's official financial statements.


 

I look forward to seeing if I would be proven right in 6 months' time. What do you think of CapitaLand?

Comments

Post a Comment

Popular posts from this blog

2020 End Of Year Portfolio Updates and Future Plans

Image
Changes to Portfolio  Recently, I have just divested my shares of CapitaLand in my portfolio. I purchased $2600 worth of CapitaLand shares at $2.9 per share before their ex-dividend date in July and sold them in December at $3.25 per share. I gained about 15% ($400), including both capital gains and dividends, from this trade which I am extremely satisfied with. This has been quite a disappointing year for Singapore REITs but 2020 Q3/Q4 has already to begun to show signs of improvement and here's hoping 2021 would be a much smoother year for everyone.  Future Plans   I have around $40k in REITs which I would not touch and just receive dividends passively for next year. On the other hand, I currently have 9,500 shares of Mapletree Industrial Trust at $2.99 per share which I am looking to sell off at around $3.25-$3.3. This would give me a return of around 8.6% - 10.3%. Also, I have another 500 shares of Ascendas REIT at $3.03 per share that I am looking to sell off at $3.3 as well.
Read more

4 Reasons Why Mapletree NAC Trust Is A Good Buy

Image
Mapletree North Asia Commercial Trust is one of Singapore's largest diversified REITs which owns properties for commercial and retail purposes. It is a relatively new REIT that was only listed on the Singapore market in 2013 but has grown rapidly to become one of the largest REITs in Singapore with properties in China, Hong Kong, and Japan. It has been a rough year for Mapletree NAC Trust with the Hong Kong protests causing the closure of their Festival Walk mall in Hong Kong and the subsequent COVID-19 pandemic in China which decreased traffic in their properties significantly. This has caused their share price to fall by more than 20% to the current share price of $0.94. Despite these recent challenges, I still feel that Mapletree NAC Trust is a good REIT to add to your portfolio in the long run. Here are my 4 reasons why Mapletree NAC Trust is a good buy.  Attractive Dividends Mapletree NAC Trust has a 7-year consistent dividend history since 2013. They have been paying out divi
Read more

Top 3 REITs On Huge Discounts Right Now

Image
Singapore's stock market for blue-chip stocks such as banks and REITs have almost returned to all-time lows in March recently. This fall in share price can be attributed to two things mainly: the poor performance of the US market recently due to the presidential election creating uncertainty among investors and the increase in COVID-19 (Secon/Third-wave) cases in Europe and the United States. As a result, many blue-chip REITs and banks in Singapore's stock market share prices have plummeted as well due to the general negative market sentiment. However, nothing fundamentally significant has changed with these stocks. This means that these blue-chip REITs business models are still extremely stable and relatively low risk. This creates many opportunities for investors to acquire these blue-chip REITs at a massive discount at their current prices. Here are my top 3 REITs that are on huge discounts currently.  1. CapitaMall Trust (Blue-Chip) CapitaMall Trust is currently trading at
Read more