Stock Upgraded: CapitaLand fair value raised to 5.15 sgd by Macquarie

Macquarie Equities Research has raised its fair value estimate for CapitaLand Ltd to 5.15 sgd from 4.85 before amid expectations of further improvement in office rents and residential property prices. "Should office rents and residential prices rise a further 10 pct from our base case scenario, that would translate to a further 0.26 sgd increase (plus 5 pct) to our revised net asset value (RNAV)," Macquarie said in a note published last week. In addition to improving property market fundamentals, Macquarie said CapitaLand should see further upside if it and partner MGM-Mirage win the license to build an integrated resort with casino on Marina Bay. "The winner of the Marina Bay bid will be announced in June 2006. Should the MGM Mirage-CapitaLand joint venture win, CapitaLand's 40 pct stake in the joint venture could be worth at least 0.55 sgd per share," Macquarie said. Another catalyst for CapitaLand's share price include the possible distribution of proceeds from the sale of Raffles City commercial complex as special dividend, it added. "Hence, a blue sky scenario could see the RNAV lifted to circa 6 sgd," Macquarie said. At 9.50 am, CapitaLand was up 0.08 sgd or 1.70 pct at 4.80 with 14.66 mln shares traded.