CapitaLand Integrated Commercial Trust - OCBC Investment 2021-01-22: Clear Signs Of Green Shoots But Challenges Remain

CAPITALAND INTEGRATED COMM TR (SGX:C38U) | SGinvestors.io CAPITALAND INTEGRATED COMM TR (SGX:C38U)

CapitaLand Integrated Commercial Trust - Clear Signs Of Green Shoots But Challenges Remain

  • CapitaLand Integrated Commercial Trust's 4Q20 and FY20 DPU fell 15.4% and 27.4% y-o-y, respectively.
  • Tenants’ sales for suburban malls recovered above pre-COVID-19 levels.
  • Good proxy to reopening theme.



CICT's FY20 results slightly below with our expectations



Green shoots in retail portfolio; uncertainties over office

  • CapitaLand Integrated Commercial Trust’s retail portfolio committed occupancy remained firm at 98.0%. However, rental reversions were negative for all its malls in FY20 (-6.6% overall), as management’s aim was to strike the right balance between rentals and occupancy rates amid a challenging landscape.
  • One huge encouragement was the recovery in tenants’ sales to 94.5% of the level a year ago in 4Q20, especially for its suburban malls, which on average had recovered to 101.3% of the level in the same period last year. Shopper traffic still trailed, as it was down 32.1% y-o-y in 4Q20.
  • As for CapitaLand Integrated Commercial Trust’s office portfolio, overall occupancy stood at 94.9%. Although rental reversions were positive in 2020, management alluded to the possibility of some negative rental reversions in 1H21, but was hopeful of a recovery in 2H21. Leasing enquiries and demand have seen a pick-up at the start of the year, but we believe there are still uncertainties over the trend of telecommuting over the medium to longer term.
  • CapitaLand Integrated Commercial Trust’s CapitaSpring has achieved its topping-out milestone, with current committed occupancy of 38% (as at 19 Jan 2021), and another 22% under advanced negotiation.

Gearing level not ideal but room to reduce it






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-01-22
SGX Stock Analyst Report BUY MAINTAIN BUY 2.60 UP 2.380



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