Property group says it will not comment on such market speculation
By UMA SHANKARI
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CAPITALAND shares made another pullback yesterday, shedding 8.2 per cent in price on market speculation that it is planning a rights issue.
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| Rights issue unlikely: Analysts say it is unlikely that CapitaLand would need to raise funds - unless there is a possibility of a large acquisition in the near future |
In response to queries, the property group said after the market closed that it will not comment on market rumour.
'In response to various media and analyst queries that CapitaLand is planning a rights issue, CapitaLand wishes to state that we will not comment on such market rumour or speculation,' the company said.
It added: 'CapitaLand regularly receives and reviews various proposals of a business, financing or other nature.'
Appropriate announcements will be made if and when required, the company said.
CapitaLand's shares lost 28 cents to close at $3.12 yesterday after a Dow Jones news report said that Singapore's largest property developer is considering a rights issue to raise capital. The report quoted a 'person familiar with the situation'.
'There has been no definite decision, but a rights issue is being considered,' the person told Dow Jones Newswires, without elaborating.
On Tuesday, the stock fell 19 cents to $3.40. But the fall came after a 32-cent rise on Monday to $3.59 and a 25-cent gain for the trading week ended Jan 2.
If the rights issue takes place soon, CapitaLand would be the second major Singapore company to raise money through a rights issue in less than a month.
In late December, DBS Group said that it planned to raise about $4 billion to bulk up its capital base.
Analysts said that it is unlikely that CapitaLand would need to raise funds with its current strong balance sheet strength - unless there is a possibility of a large acquisition involved in the near future.
'Net gearing of 0.5 times and cash hoard of $4.2 billion look comfortable for its refinancing and development cap expenditure needs for now,' noted one analyst.
The analyst also said that the recent success of CapitaLand unit CapitaCommercial Trust (CCT) in refinancing its debt also suggests that no funds would be drained from CapitaLand's balance sheet. CCT said on Tuesday that it has secured refinancing for some $580 million of loans due in March 2009.
Kim Eng Securities yesterday issued a fresh 'buy' call on CapitaLand on the shares, with a target price of $4.18 a share.
Analyst Wilson Liew said that the Chinese government in December 2008 cut its key one-year lending rate to 5.31 per cent, compared to a high of about 7.5 per cent at the beginning of the year.
It also unrolled a slew of measures aimed at the flagging real estate market.
'These measures could underpin a recovery in the Chinese property market possibly in 2H 2009, which will be positive for CapitaLand,' Mr Liew said.
'We think that CapitaLand is in a pole position for recovery in its key markets like Singapore and China, and is still sitting comfortably on its cash hoard of $4.2 billion. Its diversification into the GCC (Gulf Cooperation Council) is also thriving.'
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