RESEARCH ALERT-BoAML cuts CapitaLand to neutral

SINGAPORE Dec 6 (Reuters) - Bank of America Merrill Lynch has downgraded its rating on Southeast Asia's largest property developer, CapitaLand Ltd, to neutral from buy and cut its target price to S$2.75 from S$3.40.

STATEMENT:

Bank of America Merrill Lynch has cut its 2011-2013 earnings estimates for CapitaLand by an average of 22 percent as it expects overall sales volume and prices of residential units in China to fall by about 10 percent next year due to an oversupply.

"Our downgrade is based on more bearish view on China residential (sector), the lack of share price reaction to capital deployment and earnings uncertainty," the brokerage said.

It also noted that as CapitaLand increased its exposure to China assets, the firm has seen a deterioration of its core return on equity.

At 0141 GMT, shares of CapitaLand were 0.8 percent lower at S$2.59 and have fallen about 30 percent since the start of the year. (Reporting by Charmian Kok; Editing by Matt Driskill)