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■   Outlook improving with better performance across residential and hospitality.
■   Commercial segment stable with slightly higher committed occupancy qoq.
■   Reiterate Add with an unchanged TP of S$8.97.

3Q/9M21 business update highlights
In its 3Q/9M21 operational update, CIT indicated that outlook is relatively optimistic amid a stronger economic recovery as borders gradually reopen. For 9M21, the group enjoyed stronger residential sales while occupancies remained high for its investment properties. Meanwhile, hotel operations saw yoy RevPAR growth in 3Q/9M21 as borders reopen. Its net gearing ratio (including revaluation surplus from investment properties) ticked up qoq to 66% with interest cover of 2.7x. It has cash reserves and available undrawn committed bank facilities of S$6.5bn. Weighted average debt expiry stands at 2 years.    

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Higher residential sales yoy
CIT sold a total of 1,382 residential units (+30% yoy) valued at S$2.5bn (+76% yoy) for 9M21. This came largely from Irwell Hill Residences, Amber Park and Sengkang Grand Residences. The group commenced preview of the 696-unit Canninghill Piers and the project is expected to be well received given its location between the historic Fort Canning Hill and the Singapore River. In Australia, demand for residential units remains healthy. In UK, >35% of its Teddington Riverside units are sold/occupied.

Office and retail portfolio occupancy remained high
As at end-3Q21, CIT’s Singapore office and retail portfolio committed occupancy stood at 91.5% and 93.3%, respectively. Demand for its office space continues to be supported by wealth management, family office and technology/fintech companies. Management said that the majority of lease expiries in 2021F has been negotiated. In China, HLCC Mall in Suzhou enjoyed a committed occupancy of 94% while Hong Leong Hongqiao Center reached 96% take-up as at end-3Q. In the retail sector, shopper footfall and tenant sales remained resilient in 3Q, although CIT continued to offer flexible lease terms to tenants affected by the challenging retail environment and to entice new retailers.

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Hotel performance improving on a qoq basis
With the gradual reopening of borders and easing travel restrictions, CIT’s hotel portfolio RevPAR surged 117.1% yoy in 3Q21 and 23.8% yoy in 9M21. The best performing regions are Europe and US, particularly in gateway cities, such as London and New York. All regions were able to generate positive gross operating profit and improved EBITDA performance in 3Q. According to management, the outlook will strengthen with further relaxation in travel restrictions. The group will continue to drive operational efficiency and source for alternative demand together with its digitalisation strategies.

Reiterate Add rating
Our FY21-23F EPS estimates are unchanged. We also retain our Add rating and RNAV-based TP of S$8.97, pegged at a 45% discount to RNAV. A potential re-rating catalyst is a faster-than-expected recovery in the global hospitality sector. Downside risks: drag from slow macro outlook and tightening property policy measures.  

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