CapitaLand China Trust 1Q26 - DBS Research 2026-04-23: Holding Ground Amidst Geopolitical Headwinds

• CapitaLand China Trust (SGX:AU8U) delivered a broadly stable 1Q26 operational update with headline revenue and NPI declines caused largely by the divestment of CapitaMall Yuhuating. Gross revenue fell 5.3% y-o-y to RMB416.4mil and NPI declined 3.5% y-o-y to RMB282.4mil.
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Performance by asset class.

• Retail tenant sales rose 5.5% y-o-y and shopper traffic increased 3.3% y-o-y, supported by AEIs and new supermarket contributions. Leasing metrics were mixed. Retail occupancy remained high at 97.0% on -2.1% reversions, neutralised by new positive AEI reversions.
• Business park occupancy was 86.0% (and above the respective submarket average) with reversion at -11.3%.
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• On capital management, cost of debt declined to 3.10% while leverage edged up q-o-q to 41.4%.

Our views.

• The near-term outlook appears stable, with retail anchoring performance through improving shopper traffic and tenant sales, which rose +5.5% y-o-y in 1Q26, driven by tenant refresh initiatives and anchor store reconfiguration. Encouragingly, occupancy remains broadly unchanged despite known negative rental reversion (retail: -0.2ppt q-o-q, business parks: -0.7ppt, logistics: +0.9ppt), indicating resilient underlying demand even as pricing power lags.
• Logistics parks are also showing early signs of a rent bottom, with reversions improving from -24.5% in FY25 to -1.4% in 1Q26 following proactive leasing. Overall performance came in line with our neutral view. We continue to watch for a clearer inflection point, which may take longer to materialise given geopolitical tensions, inflation uncertainty and muted leasing sentiment.
• Business parks remain the key drag, and we expect earnings to rely on retail AEI completions and leasing execution rather than broad-based rental growth, although lower debt costs should provide some support.

Maintain HOLD.

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Geraldine WONG DBS Group Research | https://www.dbs.com/insightsdirect/ 2026-04-23

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