DBS Group - OCBC Investment 2024-02-07: Record Profits; Strong Dividend Yield Angle

• CapitaLand Integrated Commercial Trust (SGX:C38U) reported 2H23 DPU of S$0.0545, +1.7% y-o-y. CapitaLand Integrated Commercial Trust's DPU of S$0.1075 for FY23 (+1.6% y-o-y) was ~1% below consensus and our estimates.

Topline growth more than offsets higher funding cost

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• Focus is on asset enhancements (AEI) and proactive portfolio management.
• We lift DPU estimates for CapitaLand Integrated Commercial Trust and combined with a lower discount rate, raise our DDM-based target price to S$2.10. Maintain BUY.

Proactive portfolio and prudent cost management

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• Meanwhile, prudent cost management maintained operating jaws. Contribution from prior acquisitions also contributed to full year growth.
• All-in funding cost rose 20bps h-o-h/70bps y-o-y to 3.5%. Guide is for funding cost to be in “mid 3%” range.
• CapitaLand Integrated Commercial Trust's valuation rose 1.2%, led by gains in Singapore which more than offset continued weakness in overseas offices in Australia and Germany. As such, gearing inched down to 39.9% (3Q 40.8%).

Steady operations

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Krishna Guha Maybank Research | https://www.maybank-ke.com.sg/ 2024-02-07 SGinvestors.io

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