CAPITALAND CHINA TRUST (SGX:AU8U)
CapitaLand China Trust - Sequential Improvement
- CapitaLand China Trust's 2H20/FY20 DPU fell 30.2%/35.9% y-o-y.
- Portfolio rental reversions of -4%.
- Sequential improvement in shopper traffic and tenants’ sales.
CapitaLand China Trust (CLCT)'s 2HFY20 results below expectations
- CapitaLand China Trust (SGX:AU8U)'s 2H20 results were below expectations on weaker performances and an enlarged unit base after the recent equity fund raising. Revenue fell 14.2% y-o-y to S$109.0m while NPI was down 17.9% to S$69.9m, pulled down by weak operating performances across CapitaLand China Trust’s portfolio, rental income relief extended to tenants and divestment of CapitalMall Erqi, but partially offset by the acquisitions of three malls in Aug 2019.
- CapitaLand China Trust's 2H20 DPU was down 30.2% y-o-y to 3.33 cents while FY20 DPU fell 35.9% to 6.35 cents or 88%/82% of our/Bloomberg’s consensus full-year forecast, below expectations.
Portfolio remained healthy at 94.1%; rental reversions at -4%
- As at 31 Dec 2020, CapitaLand China Trust's portfolio occupancy remained healthy at 94.1%. Shopper traffic and tenants’ sales saw further recovery in 4Q20 with traffic and tenant’s sales recovering to 83.4% and 95.1% of pre-COVID-19 levels respectively.
- For FY20, rental reversion for the CapitaLand China Trust's portfolio was -4.0%, dragged by CapitaMall Grand Canyon (-32.8%), CapitaMall Qibao (-13.1%) and CapitaMall Xinnan (-11.9%) while Rock Square continued to drive impressive positive rental reversions of 20.7%.
- Looking ahead, leases representing 36.0% of CapitaLand China Trust’s gross rental income are due for expiry in 2021 and 19.9% in 2022. We expect rental reversions to remain under pressure in 2021 due to soft leasing momentum and weak business sentiment.
Pivoting towards a balanced and diversified portfolio
- CapitaLand China Trust completed the acquisition of the balance 49% interest in Rock Square in Dec 2020 and the acquisition of Ascendas Xinsu portfolio in Jan 2021.
- Moving ahead, CapitaLand China Trust will remain a China-play REIT with targeted asset allocation of 40%/30%/30% in integrated developments/retail/new economy asset class.
- See CapitaLand China Trust Share Price; CapitaLand China Trust Target Price; CapitaLand China Trust Analyst Reports; CapitaLand China Trust Dividend History; CapitaLand China Trust Announcements; CapitaLand China Trust Latest News.
- Factoring in the acquisitions, our fair value estimate increases from S$1.35 to S$1.58. We expect CapitaLand China Trust to benefit from the recovery trend in China in 2021 and growing demand and policy support for business parks, barring any risks of subsequent waves of infections.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2021-02-01
SGX Stock
Analyst Report
1.58
UP
1.35
