CapitaLand Issues Active After Weak Home Sales Data

Source : The Straits Times, Mar 24, 2008

WARRANT WATCH

PROPERTY plays are now on investors' radar screens following the release of new-homes sales figures recently.

Thus, covered warrants on these property counters have also drawn attention, including those of CapitaLand.

The latest data shows that sales of new homes last month in Singapore almost halved from the previous month. Some experts estimate that sales this quarter could hit one of the lowest levels ever seen here.

With Singapore's residential market cooling off, investors are looking at developers with a diversified business portfolio, said Mr Ooi Lid Seng, Societe Generale's (SG's) vice-president of structured products for Asia, excluding Japan.

These include CapitaLand, which has substantial investments and business activity outside Singapore. Mr Ooi said: 'Its diversified portfolio and increasing presence in emerging markets such as India, China and Vietnam can more than compensate for the slowdown in Singapore's property market.'

Last month, South-east Asia's largest developer announced its net profit for last year had grown nearly three times to $2.76 billion from $1 billion the previous year.

Last Thursday, CapitaLand shares closed four cents lower at $5.68.

Mr Ooi said investors who are bullish about the stock can consider a call warrant with a strike price of $6 that matures on July 14.

Last Thursday, that contract was the most active SG CapitaLand warrant, ending two cents down at 15.5 cents with 7.6 million units done.

Another active SG CapitaLand contract was a call warrant expiring on July 7 with an exercise price of $6.22. That warrant closed a cent lower at 12.5 cents with 1.26 million units traded.

Mr Ooi sees a neutral short-term outlook for CapitaLand. Although the stock has bounced off a support level of $5, it could face upward resistance at $6.30.

A call warrant lets an investor buy into a stock or index at a pre-set price over a period of three to nine months. A put warrant allows an investor to sell the stock or index at a pre-set price.