It also gives the business the requisite capital to redeploy into higher-earnings opportunities across the Group.
Finally, liquidity and capital are ever more important in an environment as uncertain as we find ourselves in.
Here, CapitaLand Investment is bigger and therefore has more capital available to it. As of 30 June 2022, CapitaLand Investment had S$7.4 billion in cash and undrawn facilities versus S$4.1 billion for CDL.
Winner: CapitaLand Investment
One-year and year-to-date performance
Finally, the argument was made by CapitaLand that turning itself into a holding company would unlock shareholder value.
How well has that played out? Over the past year CapitaLand Investment shares are up nearly 27% versus the 21% increase for CDL.
However, year-to-date in 2022 CDL shares have risen by 24.3% versus the 7.5% rise for CapitaLand Investment’s stock.
The majority of the gains for CapitaLand Investment shareholders came right after it listed as a new company.
It’s a draw
Think about the long-term returns
As investors, we should consider buying and holding businesses for the long term. One of the key questions we should ask is whether the businesses we own are sustainable?
For me, the winner out of this battle has to be CapitaLand Investment. That’s purely down to the fact that its business model is more aligned with long-term success.
Giving shareholders better visibility on revenue and income streams, it’s less reliant on the residential property market and the vagaries that it brings.
While CDL could see better short-term performance on improved sentiment, this can always turn very quickly.
As all of us are aware, past government restrictions on residential property purchases in Singapore tend to have an adverse impact on developers’ share prices.
By taking that out of the equation, CapitaLand Investment has built a more resilient business for its investors.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.