What’s next for CapitaLand Investment shares?

• CapitaLand Investment Limited (SGX: 9CI) share price rose 1% earlier this week
• Its subsidiary, The Ascott Limited, announced it will be acquiring Oakwood Worldwide
• Analysts foresee a 14% price upside potential for the stock in the next 12 months
• Keen to trade CLI shares? Open an account with us to start today.

CapitaLand Investment stock price: what’s the latest?

CapitaLand Investment (CLI) shares rallied this week, after its serviced apartment business unit announced plans to acquire a competitor.

On Monday (4 July 2022), CLI’s wholly owned lodging business unit, The Ascott Limited (Ascott), announced that it is acquiring Oakwood Worldwide (Oakwood), a premier global serviced apartment provider, from Mapletree Investments Pte Ltd.

The acquisition will increase Ascott’s global portfolio by 81 properties and about 15,000 units. CLI said in a press release that Oakwood’s approximately 8,500 operational units are expected to immediately contribute to Ascott’s recurring fee income streams upon completion of the transaction slated in quarter three (Q3) 2022.

It will add new markets which include Cheongju in South Korea; Zhangjiakou and Qingdao in China; Dhaka in Bangladesh; as well as Washington D.C. in the US.

How do analysts view the acquisition?

CIMB’s equity research team said the deal could expand Ascott’s network of asset owners and strategic alliances to drive growth in the long run, as ‘more than 90% of Oakwood’s asset owners are new to Ascott’.

However, they kept their FY2022 to FY2024 earnings per share estimates for CLI unchanged until the transaction is completed.

As such, they maintained their rating of ‘add’ and target price of S$4.59 on the stock. The price estimate was pegged to an assumed 10% discount to a sum-of-parts revalued net asset value of S$5.10.

‘We believe that as CLI continues to lighten its balance sheet and accelerate the growth of its fee income business, there is room for a further re-rating of the valuation of its fund management business,’ the analysts wrote.

Across the board, CLI shares have an average rating just above ‘outperform’ and an average price target of S$4.30 a share, according to the latest SGX StockFacts data.

The price target equates to an 13.7% upside potential, based on CLI’s last traded price of S$3.79.

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