CapitaLand Retail China Trust - DBS Research 2020-04-13: China Retail Returning To Normalcy

CAPITALAND RETAIL CHINA TRUST (SGX:AU8U) | SGinvestors.io CAPITALAND RETAIL CHINA TRUST (SGX:AU8U)

CapitaLand Retail China Trust - China Retail Returning To Normalcy

  • All malls now reopened with c.90% of tenants operational.
  • Hohhot bundle deal remains on track for end-2020.
  • Revised target price implies a 1.0x P/BV and a FY20 dividend yield of 6.7%.
  • Capital reserve buffer of c.S$45m to chip in towards potential tenant relief measures or cash flow uncertainties.



Maintain BUY; Target Price revised to S$1.55.

  • Overhanging risks pertaining to the COVID-19 pandemic appears to be alleviating within China, as new case counts look to be under control, with life in China slowly returning to normalcy. We understand that all of CapitaLand Retail China Trust (SGX:AU8U)'s 13 retail malls in China had since reopened, including Minzhongleyuan, which is situated in Wuhan City.
  • Our new estimates account for a c.1 month worth of revenue shaved off on a portfolio basis, during the mall closures.
  • CapitaLand Retail China Trust is currently trading at a FY20F dividend yield of 6.7% and our new target price of S$1.55 implies a comfortable target P/BV of 1.0x.


Approximately 90% of tenants operational.

  • Tenant relief of about one month’s rent was offered to selected tenants on a blended basis as several malls operated at a sub-optimal level with only primarily tenants within the necessities space remaining open. Restrictive measures had since been lifted substantially as the remaining tenants within the entertainment and education trade sectors are expected to reopen by early May.
  • Currently, approximately 89% of stores by NLA have reopened on a portfolio-wide basis. CapitaLand Retail China Trust’s retail malls that are strategically located near strong residential catchment areas, with tenants serving the daily needs of shoppers, will likely be in a prime spot to benefit from the relaxed measures.


Structural drivers still intact.






Singapore Research Team DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2020-04-13
SGX Stock Analyst Report BUY MAINTAIN BUY 1.55 DOWN 1.750



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