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Three Things To Like About CapitaMalls Asia

Ser Jing - CapitaMalls Asia to Acquire New Mall in China (pic)The first thing to like about CapitaMalls Asia (SGX: JS8) is its name. It speaks volumes.

The company is part of the S$13 billion property developer CapitaLand (SGX: C31), which was formed some 14 years ago when a subsidiary of DBS (SGX: D05), namely DBS Land, merged with Pidemco Land.

Parent company, CapitaLand, is big player in the real estate market. It has interests in residential property, office space, serviced residences and a host of Real Estate Investment Trust that include CapitaMall Trust (SGX: C38U) and CapitaCommercial Trust (SGX: C61U).

Unlike CapitaLand, which has its fingers in many property pies, CapitaMalls Asia is focussed, as its name suggests, on Asian shopping malls. That is the second thing to like about CapitaMalls Asia. Consumption can be a big driver for any economy and shopping malls could be seen as the “picks and shovels” of the consumers’ shopping trolley.

Household consumption in Singapore accounts for around 40% of the Garden City’s economic growth, while in Malaysia it is about 50%. In Japan, where CapitaMalls Asia also has a presence, household consumption contributes around 60% of the country economy and in India it is roughly 55%.

The final, though by no means the last, thing to like about CapitaMalls Asia is its consistently high Return on Equity. At around 9%, shareholders have reaped $9 of Net Income for every $100 of equity in the business. The Return on Equity is roughly in line with the average return for the 30 companies that make up the Straits Times Index (SGX: ^STI).

Over the last four years, shares in CapitaMalls Asia have fallen around 18%, which is disappointing. However, the Total Return, which includes reinvested dividends, whilst also inadequate, has been a less painful negative 3%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.