CapLand's 4Q08 core net profit of S$46.2m is below our expectations, forming 10% of our full-year forecast. FY08 core net profit of S$410m forms only 88% of our full-year forecast, on weaker-than-expected home sales in Australia and China. Earnings quality remained poor with over 60% of FY08 EBIT made up of divestment and fair-value gains. Separately, CapLand announced a 1-for-2 renounceable, fully underwritten rights issue at S$1.30 to raise S$1.84bn. Shoring up the balance sheet could be the main reason, in light of potential asset write-downs and capital commitments. We lower our core FY09-10 EPS estimates by 44-49% to factor in dilution and slower home sales. Our post-rights CY09 RNAV has been lowered from S$3.28 to S$2.36, while our post-rights target price (still pegged at a 30% discount to RNAV) has been reduced from S$2.30 to S$1.65, implying a cum-rights target price of S$1.84. Maintain Underperform.