Accumulated more Capitaland

There have been much written about Capitaland split into a listed CLIM, an investment manager with an lodging arm. There is an 10% discount to the "offer price" of about $4.1. I think the 10% discount is an opportunity for me, as I see value in the new CLIM entity. This 10% is not an mispriced opportunity. The deal will only be closed by the end of the year, a lot could have happen. Also, it is not an cash offer, and the value if CICT could go up or down, making the deal sweeter or more sour. Hence, the 10% discount is justified. However, I took a longer term look at what would be the value of CLIM, and I believe it is not too shabby. The proposition for this deal is that valuation should improve, as investment managing business has NAV of 2.6, and yet CLIM is valued at NAV (1). I do not think CLIM would traded anything near 2.6, at least not soon after the split without the company proving it execution records. Yet, I hardly think such a business model should trade at a discount to NAV. So the odds of losing is low. (Not to mentioned the discount of 10% should provide a bit of buffer)

Let me restate some.numbers u can find online.

Investment and management fees in 2020 is around 700 Mio.

We know management fees for reits and funds are very stable as wth the case of ARA (before delisting) records, but there might be some volality with Ascott lodging business, althought the margin for Ascott lodging managing business is better.(70bps compared to 40 bps.) ARA before it delisted is doing 45 bps.

Using NP margin of about 50 percent from fees collected. I estimate EPS of around 8.5 cent to 10 cents, so in terms of PE, CLIM is hardly attractive. ( If u think 3 dollars is attractive price post demerger and 4 dollars is good exit price)

I assume 3 billion of capital injection to improve is funds or REIT business, and the growth to 160K keys materialize ( read the edge article) on this.

Assume 0.5 percent asset acquisition fees, 15 Mio + Increase in AUM management 12 Mio + 60 mio (increase of 30 k keys management )

for easy calculation, let's just assume 90 Mio (calculation is to get a sense, nvm to be exact,imho) and 50 percent of it will become profits so is 45 Mio.

We are looking at predictable high single digit growth of Clim EPS over the next 2 years or 3.

Nothing exciting, but reasonable again.

In all, if u look at PE growth, neigh...

If u believe in PB alignment Swee.

In totality, is a reasonable deal if u pay below 3.5 ( which u will be doing if u have been buying in the last 5 years, since not it is not often that it goes above 3.5 and stay there) 

Finally, the deal is hardly the deal of the century, but is it better than no-deal? 

I believed it is better than no-deal for most people with investment horizon of not more than 2 years, and are vested in the last 5 years.

You might not agree with me. Investors seldom agree with each other. But, pitching this as a dumping of troubled assets and comparing it to Sembmarine is pushing it too far 

https://www.theonlinecitizen.com/2021/03/30/mas-sgx-need-to-scrutinise-capitalands-latest-restructuring-plan-protect-retail-investors-from-its-troubled-assets/

So what are your thoughts?