CapitaLand Investment - DBS Research 2022-08-12: Waiting To Pounce

• CapitaLand Investment (SGX:9CI) reported a ~38% y-o-y drop in PATMI to S$433m, largely due to lower portfolio gains given significant recycling activities a year ago.
• EBITDA declined by ~32% to S$873m, in line with estimates. The y-o-y drop was due to
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  2. rental rebates given to China (especially in Shanghai due to lockdowns in 2Q22).
• This was offset by an increase in recurring and event-driven revenue and growth in lodging fees.
• Operating PATMI rose ~+31% y-o-y as CapitaLand Investment’s fee income-related business (FRB) saw incremental fees from its key business units from its funds in Vietnam, Singapore, and managed lodging properties.

China – a lost quarter but outlook continues to brighten.

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• Overall, the new economy assets reported positive rental reversions and resilient occupancy rates of between 90%-94% over the past year, highighting its resilience in the midst of the economic slowdown.
• The lockdowns and political uncertainty in China have resulted in a slowdown in CapitaLand Investment’s recycling and investment timeline, but this prognosis is improving, given the relaxation of restrictions in China. CapitaLand Investment is keeping the gunpower dry and will look to relaunch its asset recycling and capital deployment once the outlook improves.

Asset recycling strategies

• Read more at SGinvestors.io.

Derek TAN DBS Group Research | Rachel TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-08-12 SGinvestors.io

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