CapitaLand - CGS-CIMB Research 2021-08-16: Pick-Up In All Segments


CapitaLand - Pick-Up In All Segments

  • CapitaLand’s 1H21 core EPS of S$0.083 is broadly within expectations, at 45% of our FY21F forecast.
  • Growing recurrent contributions and fee income should drive growth.
  • Reiterate ADD, with an unchanged target price of S$4.04.

CapitaLand's 1H21 results highlights

  • CapitaLand (SGX:C31) reported a 1H21 revenue of S$2.73bn (+34.7% y-o-y). 1H21 reported PATMI of S$922.2m was 854.5% higher y-o-y. Stripping out portfolio gains, revaluation gains and impairments, operating PATMI was S$433.6m (+66% y-o-y). The improvement came from higher fee income, lower rental rebates and greater contributions from development projects.
  • CapitaLand's 1H21 operating EPS of S$0.083 is broadly within expectations, at 45% of our FY21F forecast. Net debt-to-equity stood at 0.64x as at end-1H21 (0.52x excluding REITs).

Contributions from recurring sources account for 69% of revenue

  • Contributions from recurring sources, such as investment properties, as well as lodging assets, accounted for 69% of 1H21 revenue. 1H21 retail and lodging EBIT, while still below the 2H19 level, delivered h-o-h improvements as operating conditions stabilised. Lodging RevPAU improved by 4-44% q-o-q across its geographic footprint, with Europe delivering the strongest recovery.
  • CapitaLand also enjoyed positive rental reversion across its workspace portfolio.

Robust fee income from transactional activities

  • Overall fee income grew 36% y-o-y to S$416.9m in 1H21, of which fees from REIT and private fund management accounted for the largest 45% share. CapitaLand has made S$3.6bn in total investments to date, of which the majority is in new economy assets, such as data centres and logistics and business parks, as well as lodging properties. FUM increased to S$83bn from S$77.6bn as at end-2020, and appears to be on track to reach management’s target of S$100bn by 2024F.
  • CapitaLand also established three new funds totalling S$800m of new equity raised from external parties year-to-date.
  • Meanwhile, the lodging segment saw 40% y-o-y growth in new signings, with over 8,300 units signed year-to-date. This will likely boost its lodging management fee income when the units become operational and stabilised.

Shareholders approved CAPL’s restructuring

LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2021-08-16
SGX Stock Analyst Report ADD MAINTAIN ADD 4.040 SAME 4.040