1Q22 performance in line
? 1Q22 revenue and NPI in line; the latter at 23.3% of our FY22 forecast
? Overall portfolio committed occupancy stood at 93.6% at end-Mar 2022
? Reiterate Add, with an unchanged DDM-based TP of S$2.57
1Q22 business update
CICT reported 1Q22 revenue/NPI of S$339.7m/S$248.3m, up 1.5%/0.5% yoy, on higher
revenue across all segments, partly offset by the rise in utilities expenses as it had hedged
energy cost for 2022F at higher rates. The results were broadly in line with our
expectations, with NPI at 23.3% of our FY22 forecast. Gearing was at 39.1% at end-1Q
with 85% of total debts hedged to fixed rates. Management indicated that CICT’s focus in
2022 would be to remain agile and be proactive in managing costs.
High occupancy, tenant sales ticked up yoy
CICT reported 1Q retail revenue/NPI of S$142.6m/S$101.8m, fairly stable yoy. Retail
occupancy stood at 96.6% at end-1Q. Tenant sales improved 0.6% yoy (+1.9% for
downtown malls) even as shopper traffic declined 5.3% yoy. Meanwhile, retail rental
reversion came in at -4.1% (-1.3% average vs. average) dragged down by weaker
reversion of -7.1% (-3.1% average vs. average) for downtown malls. That said, excluding
Raffles City Singapore, which is undergoing rejuvenation of tenant mix, average rent
reversion would have been +1.2% in 1Q22, in our estimate. The bulk of leasing activity
came from F&B, beauty & health and fashion categories.
New contributions to boost office income from 2Q22F onwards
Office revenue grew slightly to S$97.6m in 1Q, although NPI from the office segment was
flat at S$74m. Occupancy improved qoq to 91.4% with the bulk of increase coming from
the Singapore portfolio. Rental reversion was +9.3% yoy, with a 95.5% retention rate. CICT
renewed 0.804k sq ft of space in 1Q, with new leases making up 12.2% of leasing activity.
New demand came from the financial services, IT, media, telecoms and manufacturing and
distribution sectors. CapitaSpring’s take up rate improved to 98.5% at end-1Q. CICT
completed the acquisition of 66 Goulburn St and 100 Arthur St in Australia in Mar 2022 as
well as the purchase of 70% of CapitaSky in Apr 2022. We expect contributions from these
new properties to be felt from 2Q22F onwards. Looking ahead, we believe CICT remains
well-positioned to explore inorganic growth opportunities.
Reiterate Add rating
We keep our FY22-24F DPU estimates unchanged and maintain our DDM-based TP of
S$2.57. We believe CICT is well placed to benefit from a macro recovery given its
diversified and stable earnings profile. Potential re-rating catalysts are more clarity on its
asset enhancement/redevelopment plans. Downside risks include slower-than-expected
portfolio value creation and slower rental recovery outlook.