CapitaLand China Trust - DBS Research 2022-11-01: Exiting The Peak Of Lockdowns

• See CapitaLand China Trust's announcement dated 31 Oct 2022 for its 3Q22 operational update:
  • CapitaLand China Trust reported 9M22 gross revenue up 7.0% y-o-y to RMB1,429m. 9M22 net property income rose 7.5% y-o-y to RMB970.8m. This is due to incremental contributions from the business park and logistics park segments acquired earlier in 1H21.
  • - Read this at SGinvestors.io -

Completion of CapitaMall Wangjing’s AEI a boost to reversionary rents this quarter

• 3Q22 shopper traffic rose 38% q-o-q while tenant sales rose a corresponding 34% q-o-q, following the exit of lockdowns in 1H22. On a year-to-date basis, shopper traffic declined 17% y-o-y while tenant sales declined 8.2% y-o-y with the peak impact of lockdowns felt in 1H22.
• - Read this at SGinvestors.io -
• CapitaLand China Trust recovered ~7,100 sqm of space within CapitaMall Wangjing from an anchor department store tenant, or ~16% of the mall’s total NLA. The space was released to 70 new mini-tenants, of which three-thirds are new-to-market concepts, and saw a sharp increase in shopper interest with a hike in traffic (+26% y-o-y) and tenant sales (+55% y-o-y) in its first week of opening.
• The AEI attained more than a 20% return on investment, with ~140% rental reversion post AEI, and a > ~20% increase in passing rent at the mall, based on our calculation.
• CapitaLand China Trust will be expecting a similarly higher return on investment at Yuhuating, which is undergoing AEI of a similar nature as Wangjing mall, with completion by 1Q23.
• Incremental income from AEI completion at both Wangjing Mall and Yuhuating will pose as upsides to our retail income in the coming quarters – which we have priced in.

New economy segment: Modest reversionary rents maintained

• Read more at SGinvestors.io.

Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-11-01 SGinvestors.io

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