Here's CapitaLand's next move after Australand sell-off failure

Management is taking a U-turn.

According to CIMB, the failure to sell CapitaLand's Australand means that it is now status quo on the rationalisation of non-core assets front. During the analyst briefing, CapLand stated that Australand will remain a key investment and provide the group with a stable stream of earnings.

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This appears to be a u-turn from management’s view six months ago but it did emphasise that it would remain focused on injecting the bulk of its capital into its core markets.

Management also emphasised that it would not sell a ‘non-core’ asset at ‘any cost’. According to management, Australand was put up for sale because of GPT’s initial interest.

We believe that there is nothing more that management can elaborate on this matter.

CapLand also recently raised its stake in StorHub (a small self-storage business) from 62% to 100%. Storhub was previously deemed a ‘non-core’ business as well.

Our interpretation of management’s actions are that it is biding its time and attempting to improve the profitability of these businesses in view ofdivesting in the future at better pricing.