CapitaLand China Trust - OCBC Investment 2023-10-28: Playing The Long Game

• CapitaLand China Trust (SGX:AU8U)’s 3Q23 gross revenue dipped 1.9% y-o-y from CNY488.3m to CNY478.8m due to softness in the new economy segment, the closure of CapitaMall Qibao, and rent provisions made at CapitaMall Shuangjing in view of dated arrears from the anchor tenant.

3Q23 results slightly missed our expectations

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• On an S$ basis, however, CapitaLand China Trust's 3Q23 NPI fell 8.4% y-o-y to S$58.9m due to the steep depreciation of CNY against the S$.

Divergence between retail and new economy assets

Retail portfolio the shining star

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• 9M23 retail rental reversions came in positive at 2.8%, and with occupancy cost at healthy high-teens to low-20% range, CapitaLand China Trust has the potential to drive further organic rental growth, in our view.

Management also expects further upside, with CapitaMall Grand Canyon’s B1 asset enhancement initiative (AEI) slated for completion in 4Q23.

New economy assets remains a drag

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Ada Lim OCBC Investment Research | https://www.iocbc.com/ 2023-10-28 SGinvestors.io

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