- BUY Entry – 2.20 Target – 2.35 Stop Loss – 2.13
- CapitaLand Integrated Commercial Trust (CICT) is the first and largest real estate investment trust (REIT) listed on Singapore Exchange Securities Trading Limited (SGX-ST). CICT owns and invests in quality income-producing assets primarily used for commercial (including retail and/ or office) purposes, located predominantly in Singapore.
- 1Q22 financials and businesses review. CICT recorded gross revenue of S$339.7mn and net property income of S$248.3mn in 1Q22, an increase of 1.5% and 0.5% YoY respectively. As of 1Q22, CICT’s aggregate leverage was 39.1%, well below MAS’ regulatory limit of 45% to 50%. The average cost of debt was stable at 2.3% per annum. The respective occupancy rate of the retail/office/integrated department was 96.6%/91.4%/97.6% in 1Q22, and the occupancy rate of the overall portfolio was 93.6%.
- Reopening play. Nightlife establishments with dancing among patrons will no longer be subjected to a capacity limit from 14th June. Patrons will also no longer need to obtain a negative antigen rapid test (ART) result to enter the venue, said the Ministry of Health (MOH) on 10th June. The expiry of leases in Clarke Quay resulted in a slight drop in the occupancy rate of the retail segment in 1Q22, and it is expected to recover in 2H22.
- Inflationary hedge. Out of CICT’s total borrowings of S$8.8bn as of 1Q22, 85% are on fixed interest rates, which is able to shield the impact of interest rate hikes. In addition, because rents and property value tend to increase amidst the increase in overall prices, the REITs whose properties are able to capitalise on that can provide an inflation hedge.
- Positive consensus estimates. Currently, CICT has a consensus rating of 17 BUYS, 3 HOLDS and 0 SELL, and a 12M TP of S$2.47.
(Source: Bloomberg)