CAPITALAND LIMITED (SGX:C31)
CapitaLand - Improvements All-Round Q-o-q
- Improving performance across all operating segments in 1Q21.
- Higher residential sales y-o-y, retail and workspace segments recovering.
- Reiterate ADD rating with unchanged target price of S$4.04.
CapitaLand's 1Q21 business update
- CapitaLand (SGX:C31) showed improvements in its 1Q21 operating metrics across all business segments. Fee income was 9% higher y-o-y to S$203.6m thanks to improved capital recycling activities. Financial and liquidity positions remains robust, with cash and available undrawn facilities of ~S$14.8bn, and a debt/equity ratio at 0.65x. year-to-date gross investment value totaled S$2,746.9m, with ~95% invested in new economy assets. Divestments reached S$1,045.5m, and management maintains its S$3bn target for FY21F.
Robust residential earnings visibility
- The residential segment continues to provide good earnings visibility. Residential sales recovered strongly in 1Q, with Singapore sales increasing almost 4-fold y-o-y to 81 units. China residential sales totaled 1,333 units valued at RMB4.024bn in 1Q.
- Meanwhile, CapitaLand handed over RMB2.309bn worth of sales in China and has another ~6,200 units with a sale value of RMB12.1bn to be handed over from 2Q21F onwards. In Vietnam, another S$218m worth of sales is expected to be settled from 2Q21F onwards.
Retail segment recovering, workspace stayed resilient
- Retail operations also showed improvements y-o-y and q-o-q in 1Q, with tenant sales in Singapore and China at 4.6% and 56.4% higher y-o-y, while Malaysia remained 12.4% below the previous corresponding period. Occupancy ranged from 87.6-97.2%. Rental reversions stayed largely muted across these markets as outlook remained cautious.
- The workspace segment was fairly resilient overall, with committed occupancy ranging between 84.2% and 98.7% across its office, business parks and logistics and industrial assets. Rental reversion stayed mostly positive across its geographic footprint.
- Within the lodging segment, average RevPAU was 27.6% lower y-o-y but was fairly stable at -5% q-o-q in 1Q. Operations in Southeast Asia and Australasia as well as the Gulf Region posted positive RevPAU growth q-o-q in 1Q with sequential improvements in Australia, Philippines, Indonesia and Thailand, as well as long stay demand and higher occupancy across several countries in the Gulf Region. It had also opened another 1,800 units year-to-date 2021, bringing total operational units to 70.846 units.
Reiterate ADD rating
- Following the earlier announcement of the proposed corporate restructuring exercise, CapitaLand's management indicated that the scheme and introductory documents are expected to be released in 3Q21 and an EGM would be held in 2H21.
- We leave our earnings unchanged post the 1Q update. Our RNAV for CapitaLand is maintained at S$6.22 with an unchanged target price of S$4.04, assuming a 35% discount to CapitaLand's RNAV.
- See
- Catalyst for share price outperformance is a faster-than-projected pace of asset recycling.
- Downside risks include weaker-than-expected macro outlook.
LOCK Mun Yee
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-05-12
SGX Stock
Analyst Report
4.040
SAME
4.040
