Too big and too good to miss!

Investment Thesis

Reopening, recovery, and regrowth – CICT is a key beneficiary CapitaLand Integrated Commercial Trust (CICT) is a key proxy and beneficiary of the reopening play. We estimate CICT could deliver c.12% of DPU growth in FY22F and a 9% two- year CAGR, one of the stronger growth rates among peers.

Near-term overhang on office vacancy lifted with newly completed buildings to contribute from FY22F. With CapitaSpring and Asia Square Tower 2 having achieved almost full committed occupancy, the near-term concerns on vacancies is behind us. In addition, newly completed and refurbished buildings will begin contributions in FY22F.

Rare opportunity to acquire good-quality, newly completed prime Singapore office from sponsor pipeline is the key catalyst for re-rating. CICT is one of the few commercial SREITs that has the opportunity to acquire two newly completed prime Singapore office assets (79 Robinson and the remaining 50% stake in CapitaSpring) from its sponsor.

Valuation:

Reinstate coverage with BUY rating, TP of S$2.50. We reinstate our coverage with a target price (TP) of S$2.50 which implies a P/NAV of 1.25x, below +1SD of its historical range.

Where we differ:

Too big to ignore. We believe that, as the largest S-REIT, CT will be too big to ignore. The company’s integrated commercial assets drive synergistic value and its size offers a bigger platform to grow with acquisitions of integrated development led by the rising global trend of live-work-play.

Key Risks to Our View:

The key risks to our view are an economic downturn, as well as a prolonged recovery and weak sentiment. Setbacks from new waves of the pandemic could delay CICT’s recovery.