CapitaLand China Trust - DBS Research 2023-07-28: Depreciating RMB Throws Salt On Recovering Wounds

• CapitaLand China Trust (SGX:AU8U)'s 1H23 top-line gross revenue up 0.8% y-o-y to RMB947.8m, while NPI up 0.8% y-o-y to RMB663.7m. DPU of 3.74 cents represents a -8.8% y-o-y decline, primarily from foreign exchange losses and higher cost of debt. See CapitaLand China Trust's distribution date.
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• Business Park – reversions are positive at 3.9% while leasing momentum more than doubled from 1Q23. Occupancy improved to 91.5% (from a low of 89.8% in 1Q23). New leases were in the electronics and professional services space (making up approximately half of all new leases signed, NLA), as opposed to info (10%) and e-commerce (6%) tenants.

Has sentiment turned? Consumer sentiment looks to be ahead of business sentiment.

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• For the business park segment, supply within the Hang Zhou submarket continues to be an ongoing headwind as opposed to the Suzhou submarket, in lieu of slower new leases within both the info comm and e-commerce segments, as these were the same trade sectors that saw comparably larger business continuity risk amongst smaller players across the lockdown. Leasing momentum sees a significant pick up in 2Q23 as opposed to 1Q23 in terms of lease finalisation, with a decent pick up in occupancy for the quarter.

Foreign exchange a bigger concern to us as opposed to capital management.

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Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-07-28 SGinvestors.io

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