- CapitaLand Investment (SGX:9CI)'s 1H23 revenue of S$1.345bn (-0.7% y-o-y) was slightly below our estimates, forming 41% of our FY23e forecast, due to a 3.6% decline in contribution from the Real Estate Investment Business (REIB) as there was loss of contribution from properties divested in 2022, as well as lower contribution from properties in China. It was partially offset by higher Fee Income-related Business (FRB), which was up 2.4% y-o-y supported by stronger fees from lodging management.
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- Upgrade CapitaLand Investment to BUY with a lower SOTP-based target price of S$3.68. We lower FY23e/24e earnings forecast for CapitaLand Investment by 17% to account for higher finance costs, lower portfolio gains, and lower margins from FRB. Our SOTP-derived target price of S$3.68 for CapitaLand Investment represents an upside of 22.9% and a forward P/E of 15x.
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The Positives
Lodging segment star performer.
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