2 Things That Investors Should Know About CapitaLand Limited Now

CapitaLand Limited (SGX: C31), a real estate developer and investor, is one of the largest businesses of its kind in Singapore with its market capitalisation of S$12.8 billion. The company’s also a blue chip stock given that it is one of the 30 constituents of Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

There are many other Singapore-listed entities under CapitaLand’s corporate umbrella and they include:

  1. CapitaLand Mall Trust (SGX: C38U), a real estate investment trust with a focus on shopping malls located in Singapore.
  2. CapitaLand Commercial Trust (SGX: C61U), a REIT that owns mostly commercial real estate in our Garden City.
  3. CapitaLand Retail China Trust (SGX: AU8U), a REIT with a portfolio of retail malls found in China.
  4. Ascott Residence Trust (SGX: A68U), a REIT that owns hospitality assets in 38 cities across 14 countries.

If you are a current or prospective investor of CapitaLand, there are two important things about the company that you should know:

  1. CapitaLand has been engaged in share buybacks recently. In fact, the company is one of the top five companies in Singapore’s stock market in June with the most amounts of money spent on buybacks.
  2. The company’s current share price of S$2.99 is 11% lower than a year ago.

Now, the two things above are important to note for investors for two reasons.

First, a company may buy back shares when its management team perceives that its shares are undervalued. The legendary investor Peter Lynch thought the presence of share buybacks is a positive thing and had included it in his investing checklist that he shared in his book One Up On Wall Street.

Of course, it must be stressed that the appearance of share buybacks alone in CapitaLand’s case does not mean that the company is undervalued. But, it could still be a prompt for investors to start digging deeper.

Second, after seeing its shares decline by 11% from the previous year, CapitaLand’s current price-to-book ratio of 0.7 is near a 5-year low. You can see this in the following chart:

CapitaLand's price-to-book (PB) ratio since 11 July 2011
Source: S&P Global Market Intelligence

CapitaLand’s share buybacks as well as lower-than-average valuation makes the real estate giant an interesting candidate for further research.

If you'd like more insights on investing and important updates about the stock market, you can sign up for The Motley Fool Singapore's free weekly investing newsletter, Take Stock Singapore. 

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

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