$CAPITALAND INTEGRATED COMM TR.(CPAMF)$ $CapLand IntCom T(C38U.SI)$
Results missed but FY23 DPU still poised to grow
CapitaLand Integrated Commercial Trust (CICT) is the largest S-REIT by market capitalisation and assets in Singapore. It has a strong sponsor in CapitaLand Investment Limited, and its scale has been significantly enlarged following the completion of the merger with CapitaLand Commercial Trust in Oct 2020. CICT now offers investors diverse exposure to the suburban and downtown retail market and core CBD office sector in Singapore, coupled with a small exposure to Germany, and has recently penetrated the Australian commercial market. We see positive signs of recovery from the pandemic, and view CICT as a good proxy to the reopening theme. However, its aggregate leverage ratio of 40.4% (as at 31 Dec 2022) is slightly on the high side. There are mitigating factors, such as having 81% of its borrowings hedged and CICT’s average term to maturity for its debt is among the longest in the S-REITs sector.
There are definitely a couple of upsides withthis stock. With the China's reopening of borders, the stock is likely to benefit from the influx of Chinese tourists and they are likely to spend in malls. However, with macro economic headwinds coming, people may reducetheir spend on discretionary goods and services. This will likely to dampen the stock price. Further, the expected higher terminal interest rates are likely to affect their interest payments which will eat into their profits. I am wary given their high debt levels. The stock has been rather bullish of late and I will not be entering at the moment as the price remains too elevated for my liking. I may enter ifit goes lower by at least 10%.
DYODD
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Long term game