CapitaLand pins its hopes on China sales as valuation sinks to record low

Sales will continue to be robust this year.

Analysts say that CapitaLand’s operations in China will drive the company’s growth in 2016, despite the ongoing slowdown in the domestic property market.

A report by RHB Research said that CapitaLand’s China sales will remain strong this year, although sales figures are unlikely to beat the record set in 2015.

“China would increasingly be the focus, as Singapore FY15 revenue fell to one-third of total turnover following a deadpan domestic market,” RHB said.

CapitaLand China achieved record sales of 9,402 units which helped to offset the inertia in Singapore residential sales.

RHB noted that CapitaLand is trading at a price-to-book value of 0.67x, just shy of its crisis valuation of 0.60x.

Despite the extremely low valuation, RHB cautions that there are few catalysts on the horizon for CapitaLand.

“We sense a more challenging environment in FY16. CapitaLand trades near GFC P/BV level, but we see limited catalysts in sight to boost share price in the current market,” said RHB.