Mountain of evidence reveals a thriving China market for Capitaland

14 malls are slated for opening.

According to UOB Kay Hian, CapitaLand’s malls in China will see a operational turnaround with 14 malls coming on stream over 2012-14 that will boost the overall ROE from its China portfolio from the mid-single digits (~7%) to low-double-digits (11%).

Encouraging China sales to drive share price up. Residential sales momentum in China showed encouraging signs of pick-up with a total of 911 units sold in 3Q12 (a 3-fold increase yoy and +12% qoq).

9M12 sales of 1,978 units increased 61% yoy while prices increased 3-5% in 3Q12 despite flattish overall prices suggesting a strong demand for its projects.

Here's more from UOB:

Lim Ming Yan takes the helm, announces more focused organisational structure. Immediately after taking over as President and Group CEO, Mr Lim Ming Yan realigned the group into four main businesses: CapitaLand Singapore, CapitaLand China, CapitaMalls Asia and The Ascott Ltd.

The move is part of CapitaLand's strategy to simplify its organisational structure and sharpen its focus on the key growth markets of Singapore and China.

We view the move favourably as it will result in cost effectiveness, reducing the overlap across various business functions and allowing CapitaLand to respond faster to changes in market dynamics.

The encouraging data points and improvement in the macro-economic environment bode well for CapitaLand as China accounts for nearly 40% of its assets.

CapitaLand is one of the largest listed real estate companies in Asia with asset value of S$33.4b (excluding treasury cash) as at Jun 12. Its core businesses in real estate, hospitality and real estate financial services focus on gateway cities in Asia-Pacific, Europe and the Middle East.

The company’s real estate and hospitality portfolio spans more than 90 cities in over 20 countries. Listed subsidiaries and associates include CapitaMalls Asia, The Ascott Group, Australand, CapitaMall Trust, CapitaCommercial Trust, Ascott Residence Trust, CapitaRetail China Trust and Quill Capita Trust.

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