CapitaLand Integrated Commercial Trust - Maybank Research 2024-08-13: Resilient Portfolio, Growing Distribution

• CapitaLand Integrated Commercial Trust (SGX:C38U) reported 1H DPU of S$5.43 cents, -0.4% h-o-h/+2.5% y-o-y. Top-line growth coupled with cost management mitigated the impact of higher interest expenses. Portfolio occupancy was steady with strength in retail offsetting the slippage in office.

Steady performance

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• Management is waiting for an opportune time to undertake capital recycling or redevelopment projects.
• All in, no major surprises. Valuations are fair but we retain our BUY and S$2.25 target price on resilient income and credit profile.

Healthy operating metrics

• CapitaLand Integrated Commercial Trust's 1H24 revenue and NPI grew 0.9%/2.2% h-o-h/ y-o-y. Growth was supported by higher revenue from existing properties, offsetting the absence of income from Gallileo (undergoing AEI). New property management agreement and lower utilities expenses helped lift margins.
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• Office occupancy slipped with lower occupancy in Singapore and Germany.

Retail rent reversion was +9.3%, relatively similar for suburbs and downtown.

Overall tenant sales were flat due to high base effects and high outbound travel during school holidays. Office reversion was mid-teens.

Management of CapitaLand Integrated Commercial Trust reiterated high single digit reversion guide for the full year. Potential downside for office for both Singapore and overseas exist while retail is relatively more steady.

Stable financial ratios

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Krishna Guha Maybank Research | https://www.maybank-ke.com.sg/ 2024-08-13 SGinvestors.io

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