Investment Theme: The Land Element

Recently, there has been some talk that the government could be easing off the property measures that were put in place to cool the market and that has seem to make the property counters move positively. ACCICB has been making some buys here and there so I thought of taking a look myself.

This blog post was written weeks ago but I never got around to finishing it then ACCICB told me that he tried to buy Capitaland for trading but didn't get it and the next day there was a trading halt due to the issuance of the convertible bonds. I was surprised and we were wondering whether Capitaland will be privatized like Keppel Land but I guess it wouldn't be....?

I did some research on 3 of the players, namely CapitaLand, CDL and UOL. Amongst the 3, I like CDL and UOL and will be giving CapitaLand a miss.

Source: CapitaLand's website

I wanted to buy CapitaLand as I felt that it provides the best coverage for all the different stakes it has in various companies such as CapitaMalls (CMT), CapitaMalls Asia (CMAT), CapitaCommercial Trust (CCT), Ascott REIT (AREIT) as well as its own developer business segment. 

Strangely though, after I did my research I just did not feel that strongly about this company as compared to CDL and UOL although fundamentally this is nothing wrong with this company. In fact, I keep asking myself why I am not interested in it anymore, it's as if I want to be interested but just am not. I looked at the developer business segment and find it to be not as attractive as that of CDL and UOL. 

Of course, the developer business segment is a smaller proportion of the business but then yet again if you feel very strongly about their REITS business, you can always buy into the individual REITS, except for CMAT. Which is what ACCICB did previously and made some money on and off. 

Personally I like CMT and CapitaRetail China Trust (CRCT) and was once bullish on CCT but not a fan of AREIT. I don't delve into REITS much on my blog because there are many financial bloggers who I feel do a better job than me at dissecting the REITS and my views may not coincide with theirs all the time. I do think that CMAT will benefit once the Jewel project is up but from now till 2018 is indeed a long time to be vested in this company. 


Source: CDL's website

I wanted very much to own some CDL shares as it has good upside potential and strangely ever since I identified it.. it has been going up although it has retraced a little in recent days. For CDL, its South Beach project and list of EC projects that made sense to me especially since South Beach would be opened in phases. This only makes excellent sense for me to grab some Suntec REIT and CMT shares  as there will be some spillage in terms of human traffic and footfall. 

Their list of residential projects are pretty well known and have done quite well in terms of sales. I know of people who have bought some units in their projects. They are also going to start marketing their UK property projects in 2Q 2015 and their hotel chain M&C have been busy expanding their footprint as well. They also have a steady stream of revenue from their many properties as seen from their impressive property portfolio both locally and overseas. 

Source: UOL's website

UOL is also on my watchlist and it has retraced a little too in recent days. It has a nice portfolio made up of development and investment properties, hotels and serviced suites. I must say that as property development still makes up half of their revenue, it is important that their existing and upcoming projects do well. This is despite the fact that their profit from property investments being a strong no. 2 contributor to the group. 

Taking a look at their 2014 annual report, the key highlights would be their Prince Charles Crescent and Bishopgate site, their recent opening of OneKM mall, the rejuvenation of Marina Square, the opening of PARKROYAL Nay Pyi Taw, JV for Hotel in Yangon and the upcoming PARKROYAL Langkawi Resort. That's a nice mix of retail, commercial, hotel projects both locally and internationally which pleases me. 

There are many things that I like about CDL which is rather similar to UOL as both of them have a financial institution that's somewhat connected to their firms which means that financing would not be an issue as deep pockets are needed in this sector. They are both diversified players such that they have their hands in property development, hotels, malls, commercial buildings which makes for lower risks given the cyclical nature of the industry. Both firms are well run and their foresight when it comes to property is undeniably admirable and I'm hoping to dip my hands in at the right time. 

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