Warrant Watch: Capital Land Contracts Active!

Feb 25, 2008

WARRANT WATCH: CapitaLand contracts active on superb results

THE recent release of a better-than-expected set of full-year results has put CapitaLand warrants under the radar screen of investors.

South-east Asia's biggest developer announced last Friday that its net profit last year grew nearly three times to $2.76 billion from the previous year's $1 billion.

This trumped the average forecast of $2.2 billion from 14 analysts polled by Reuters.

The company's future seems bright, despite the current market turmoil.

Mr Ooi Lid Seng, Societe Generale's (SG's) vice-president of structured products for Asia, excluding Japan, said: 'A shortage of prime office space in Singapore will keep rental rates up, while CapitaLand's investments in fast-growing countries like India and China will help buffer it against any slowdown in earnings.'

CapitaLand shares closed down nine cents at $6.18 on Friday.

'The share has remained quite resilient, falling by only 1.2 per cent since the beginning of this year, compared with the 12 per cent fall incurred by the Straits Times Index,' Mr Ooi said.

He highlighted a CapitaLand call warrant offered by SG for those who held a positive view of the company. It has a strike price of $6.22 and expires on July 7.

That warrant closed a cent down at 24 cents on Friday, with 5.68 million units traded.

In contrast, another CapitaLand contract issued by SG saw only 7,000 units done, as it finished a cent lower at 13.5 cents. That warrant has a strike price of $6.40 and matures on June 9.

Mr Ooi feels the short-term outlook for CapitaLand is slightly positive.

'The share has rebounded by about 14 per cent since hitting its recent bottom of $5.42 on Feb 11,' he said. 'On the upside, the share will meet some resistance at $6.40, while support can be seen at $6.'

A call warrant lets an investor buy into a stock or index at a pre- set price over a period of three to nine months.

A put warrant allows an investor to sell the stock or index at a pre-set price over a fixed period of time.