CapitaLand can't be knocked off top spot despite China's property curbs

And even though its value has dropped 10%.

According to Barclays, China earlier this month announced fresh measures to rein in home prices. The curbs include stricter implementation of an existing 20% capital gains tax on home sales, tightening restrictions on home buying and higher down payments for those buying a second home in cities where prices are rising too quickly.

CapitaLand (CAPL SP, OW, PT S$4.64) has dropped 10% in value since its FY12 results on 21 Feb, on policy overhang in China and Singapore residential (which makes up 21% and 10% of its asset value respectively), besides the general market selldown on the Cyprus bailout crisis.

Here's more from Barclays:

We view CAPL as more diversified, and less susceptible to specific residential policy risk. While its China home sales could decelerate from here, it has locked in healthy presales since 2Q12-1Q13. Its mega Singapore residential projects, namely D’Leedon and Interlace, are now 72-74% sold.

We continue to like CAPL for its ROE recovery: we expect core ROE to rise from 2.5% in FY12 to 5.5% in FY14E, and the more holistic approach to ROE and potential exit of non-core assets with the new reorganisation exercise could extend its ROE story.

Valuations have become even more attractive in our view, trading at 0.99x P/B and 0.68x P/RNAV vs its historical averages of 1.15x P/B and 0.87x P/RNAV.

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