Capitaland Investment

[tonylim]

By DBS : CapitaLand Investment Ltd: A strong end to FY24!
Derek Tan27 Feb 2025 DBS
PATMI rose > 100% y/y on the back of higher gains and lower revaluation losses
Proposing higher dividend payout of 18 Scts / share translating to a yield of c.7%, 6 Scts worth of CICT shares (dividend in specie) a sweetener for shareholders
Board proposing to raise payout ratio to 50% of PATMI (form 30% previously)

What happened

CapitaLand Investment Limited (CLI) delivered a strong set of FY 2024 results, with total PATMI surging 165% y/y to SGD 479mn, beating ours and consensus estimates. This was driven largely portfolio gains of SGD 230mn (+8% y/y) and lower revaluation losses (- SGD 261mn, a 57% dip y/y). Operating PATMI, however, moderated 10% y/y from SGD 658mn> to SGD 510mn, reflecting the absence of divested assets. Revenue rose 1% y/y to SGD 2.815bn, as Fee-Related Business (FRB) revenue climbed 9% y/y to SGD 1.169bn, offsetting softer real estate investment income. EBITDA jumped 29% y/y to SGD 1.421bn, benefiting from SGD 230mn in net portfolio gains. CLI proposed a total 18 Singapore cents dividend per share, comprising a 12-cent core dividend and a 6-cent special dividend-in-specie of 0.031 CapitaLand Integrated Commercial Trust (CICT) units per share. The total payout ratio rises to 50% of cash PATMI, compared to 30% previously which the board is proposing to increase to enhance shareholder returns.

Our view

The strong performance is a shot of confidence for the group as CLI transition into an asset-light and fee-income based company. We believe that investors will cheers the (i) higher future payout and (ii) expected higher returns as the group continues to trim is balance sheet to achieve more operational efficiency. Maintain BUY, TP SGD 3.85.

[weijian]

CLI proposed a total 18 Singapore cents dividend per share, comprising a 12-cent core dividend and a 6-cent special dividend-in-specie of 0.031 CapitaLand Integrated Commercial Trust (CICT) units per share. The total payout ratio rises to 50% of cash PATMI, compared to 30% previously which the board is proposing to increase to enhance shareholder returns.

Our view

The strong performance is a shot of confidence for the group as CLI transition into an asset-light and fee-income based company. We believe that investors will cheers the (i) higher future payout and (ii) expected higher returns as the group continues to trim is balance sheet to achieve more operational efficiency. Maintain BUY, TP SGD 3.85.

I had invested in CLI, expecting to eventually own an "asset light" business but as usual, ownership will be more complicated as the company does dividend in specie or spin off portions of its "asset heavy" business to be more capital efficient. It is also very similar to how its 2 other siblings, Keppel Ltd and Sembcorp own transformation are also partly through distributing its own assets to shareholders.

CLI has stated "Targets sponsor stakes in listed funds of ~15-20% by 2028". Excluding the Msia REIT (at 41%), only CLAR meets the criteria at 18% ownership. The remaining 4 listed vehicles are ~2-5% above the upper limit of 20%. This probably means a few things I suppose:

(1) Any EFR will only be done from a "position of strength" and executed in a relatively good market sentiment for REITs, else the Sponsor CLI has a high risk of mopping up excess rights. CLI did a quick one with CICT when the latter bought the 50% Ion Orchard stake in that short window in Sept2024. On hindsight the team executed that opportunistic sale in such a short window, was pretty amazing. Was it luck? Or their executing capability to read the ground? Or a mixture of both?

(2) To acquire new assets, capital will largely be raised via private placements and debt. Private placements and debt had always been the preferred capital raising avenues for FUM managers for their FUM, but this had been shut since mid 2022. So in the next few years, there has to be a bigger move towards reversion to the mean pre-mid 2022, whether in terms of interest rates or willingness of institutional investors to allocate to Asia Pacific assets.

(3) More dividend in specie down the road. Maybe once every 2 years, based on current trend (8% of CLAS in 2023 and now 2% of CICT in 2025).

[weijian]

In China, competition is intense but it makes it up to foreign participants for its breadth. Capitaland was one of the top 10 developers (under Pidemco Land) 10-15years after first entering the Chinese market. When local developers became cheaper better and faster, it decided to retreat to management instead.

So, is there a competitive moat for foreigners to partner with Chinese money managers to manage their assets? As per CLI Mgt, the answer is a YES. The biggest institutions in China are SOEs and one of their unique characteristics is their political intertwine. There is intense competition between CCP cadres commandeering these SOEs to "outdo" each other for political patronage or promotion within CCP ranks. So ironically, been an foreigner means that "You can be trusted".

CapitaLand Investment partners major domestic insurance company to establish its first onshore master fund in China with RMB5 billion equity

CapitaLand Investment Limited (CLI), a leading global real asset manager, has established its first onshore master fund in China, CLI RMB Master Fund, with a total equity commitment of RMB5 billion (S$921 million)1. CLI has secured a major domestic insurance company to take up a majority stake in the master fund in line with its asset-light strategy to grow its funds under management (FUM). The master fund is expected to contribute RMB20 billion (S$3.7 billion)1 to CLI’s FUM when fully deployed.

With this new fund, we have successfully raised RMB54 billion across seven RMB funds since 2021, demonstrating the strong momentum of our domestic-for-domestic fund strategy to grow FUM and recurring fee income

https://links.sgx.com/FileOpen/21052025_...eID=846202

[weijian]

Astaka Holdings listed on SGX via a RTO in 2015 and therefore, some of us may not be strange to it. It ran into problems when covid hit and was sued by its main contractor China State Construction Engineering (CSCE) for unpaid sums. Much of these payables have since been converted to loans with land parcels as security. The controlling shareholder Daing A Malek has royal links to the current Agong and his family.

Looking beyond these problems and yellow links, I think Astaka has made an astute decision to partner with CLI for its retail strategy.  The no. of Singaporeans and their net spend in JB will only increase but there are no lack of shopping malls in JB and it will get more crowded in future.

The million dollar accounting issue at Multi-Chem stemmed from CSR (Capitaland Star Rewards) been used as the medium for supplier rebates. That episode hammered into me the advantage that CLI has in terms of CSR.

Singaporeans are no stranger to CSR and therefore, I can imagine that in time to come, CSR will be first introduced at this new upcoming development. But it will not stop there and will be progressively fan out to the rest of the shopping malls in Capitaland Msian Trust. After all, CSR generated 1.3bil SGD and 7.3bil RMB of tenant sales in Spore and China respectively in 2024.

CapitaLand Investment to advise Malaysian developer Astaka on retail strategy for RM1.2 billion Johor development

The project will comprise a lifestyle mall with 300,000 square feet of net lettable area, a five-star hotel with 250 rooms and 300 residential units, Astaka and CLI announced in a press release on Tuesday (Aug 19) evening.

Ervin Yeo, chief executive of commercial management at CLI, said that the company hopes to create a retail experience that appeals to both Johor residents and tourists.

Onn Hafiz noted that both companies’ partnership aligns with the Johor government’s efforts to raise cross-border business collaboration. “We look forward to more private sector partnerships that will boost cooperation between Johor and Singapore across economic sectors, ultimately supporting the success of the Johor-Singapore SEZ,” he added.

https://www.businesstimes.com.sg/compani...lion-johor

[weijian]

Mapletree is a wholly owned subsidiary of Temasek and currently, Temasek owns 52% of CLI through Capitaland Development.

To recap past related party transactions, Temasek sold Ascendas-Singbridge (ASB) in 2019 to Capitaland and Mapletree Investments sold Oakwood Worldwide in 2022 to Ascott. Both transactions are synergistic and complimentary on paper - (a) ASB's business space (industrial) combined with Capitaland's commercial/retail capabilities. (b) Oakwood Worldwide increased scale on Ascott's lodging platform which works towards overall costs reduction (eg. IT)

A Capitaland/Mapletree merger will have much overlap. So rather than extracting synergies from capabilities, the contribution will be more towards scale economies (eg. cost reduction). Using of Capitaland Star Rewards (CSR) at Vivocity, Mapletree Business Park and Festival Walk (reward program is avail in Capitaland managed malls in Mainland China) will be welcomed I suppose.

On a final note, looking at Mapletree Investments' annual report, it is still relatively asset heavy. Out of its headline 80bil AUM as end March2025, ~20bil are still owned assets. So if the below merger does materialize, investors could expect Temasek to sell only the asset/property mgrs.

CapitaLand Investment and Mapletree Investments mull merger: report

[HONG KONG] Two Singapore property asset managers are mulling a merger that could create one of Asia’s largest real estate firms with more than US$150 billion under management, Dow Jones reported on Monday (Nov 3).

https://www.businesstimes.com.sg/compani...ger-report

[EnSabahNur]

Capitaland Investment's goal to reach 200 billion in AUM was always going to be hard, without an acquisition of some sort.

Keppel has the same goals, I think. Based on their website, they are at 91 billion AUM now.

https://www.straitstimes.com/business/ke...on-by-2030

I wonder if they considered going after Mapletree themselves.

[weijian]

Hi EnSabahNur

Thanks for your thoughts. Based on previous presentation/talk on the 200bil AUM, Mgt had said that the pathway would be a combination of both organic growth (private funds-attracting new LPs and listed funds-purchasing new assets) and inorganic growth (mergers and acquisitions).

The current talks look to be initiated by Temasek who has a controlling stake in both companies, with the background context that parent Temasek is undergoing their own restructuring/review. Keppel Ltd Mgt can probably see that the ball is firmly in Temasek's court.

On another note, one asset class missing from CLI's portfolio would be "Infrastructure" and that is actually what Keppel's AUM is mainly about. In the words, Mapletree is actually more complimentary to Keppel than to CLI. So, I suppose the head honchos at Temasek are focusing on economies of scale than anything else.

Finally CLI has done past business with Temasek/Mapletree and so I suppose any sort of deal + hitting desired future outcomes are more certain in this combination. Overall, I think Mapletree should be listed as that aids towards reviving the Spore equity scene. So whether is it through M&A or IPO, it doesn't matter.

[weijian]

Astaka Holdings listed on SGX via a RTO in 2015 and therefore, some of us may not be strange to it. It ran into problems when covid hit and was sued by its main contractor China State Construction Engineering (CSCE) for unpaid sums. Much of these payables have since been converted to loans with land parcels as security. The controlling shareholder Daing A Malek has royal links to the current Agong and his family.

Looking beyond these problems and yellow links, I think Astaka has made an astute decision to partner with CLI for its retail strategy.  The no. of Singaporeans and their net spend in JB will only increase but there are no lack of shopping malls in JB and it will get more crowded in future.

The million dollar accounting issue at Multi-Chem stemmed from CSR (Capitaland Star Rewards) been used as the medium for supplier rebates. That episode hammered into me the advantage that CLI has in terms of CSR.

Singaporeans are no stranger to CSR and therefore, I can imagine that in time to come, CSR will be first introduced at this new upcoming development. But it will not stop there and will be progressively fan out to the rest of the shopping malls in Capitaland Msian Trust. After all, CSR generated 1.3bil SGD and 7.3bil RMB of tenant sales in Spore and China respectively in 2024.

CapitaLand Investment to advise Malaysian developer Astaka on retail strategy for RM1.2 billion Johor development

The project will comprise a lifestyle mall with 300,000 square feet of net lettable area, a five-star hotel with 250 rooms and 300 residential units, Astaka and CLI announced in a press release on Tuesday (Aug 19) evening.
Ervin Yeo, chief executive of commercial management at CLI, said that the company hopes to create a retail experience that appeals to both Johor residents and tourists.

Onn Hafiz noted that both companies’ partnership aligns with the Johor government’s efforts to raise cross-border business collaboration. “We look forward to more private sector partnerships that will boost cooperation between Johor and Singapore across economic sectors, ultimately supporting the success of the Johor-Singapore SEZ,” he added.
https://www.businesstimes.com.sg/compani...lion-johor

This is the 2nd up-and-coming JB mall that the commercial mgt arm of CLI has bagged. Coronation Square is where MRT Corp (RTS developer on Msian side) has bought land for ~800 parking lots meant for the RTS link. So iņ the future, I suppose one will park their car at Coronation Square and then walk to the RTS via a covered walkway.

CapitaLand Investment partners Coronade Properties on Johor Bahru City Centre’s largest retail landmark, Coronation Square Mall

Johor Bahru/Singapore, 24 November 2025 – CapitaLand Investment Limited (CLI), a leading global real asset manager with a network of more than 70 malls across Singapore, Malaysia and China, has been appointed by Coronade Properties Sdn Bhd (Coronade Properties) to collaborate on shaping the retail vision for Coronation Square Mall. The new retail mall will be a key component of Coronation Square, a landmark integrated development strategically located in the Ibrahim International Business District (IIBD) within the Johor-Singapore Special Economic Zone (JS-SEZ). It will be directly connected to the upcoming Rapid Transit System (RTS) link, offering seamless accessibility between Singapore and Johor Bahru
 
This follows the recent appointment of The Ascott Limited (Ascott), the lodging business unit wholly owned by CLI, to manage Ascott Coronation Square Johor Bahru, the development’s hotel component. By partnering CLI on both the retail and hospitality components, Coronation Square will stand to benefit from CLI’s extensive ecosystem – spanning strong shopper and tenant networks, hospitality expertise, and a global customer base – to create synergies that will boost footfall, elevate visitor experiences, and position the development as a vibrant gateway destination within the JS–SEZ.

https://links.sgx.com/FileOpen/CLI_NR_24...eID=867842

[hancheng08]

Just thinking if this will cannibalize their retail sales in SG, since the key management in the JB malls is to attract SG visitors to spend, while on the other hand, it's about keeping SG shoppers to spend in their SG malls.

[weijian]

Hi hancheng08,

A landlord (or in this case, CLI managing the malls on behalf of owners) gets paid by their tenants who pay rent, and not from retail customers buying stuff in the malls. Of course, retail sales indirectly affects the sustainability of tenants to pay rent, which in turn decide the occupancy and rental rates. But by viewing through the lens of a landlord rather than retail sales, one will realize that this isn't a zero sum game. In essence, the customer's wallet share can be expanded rather than just shifted around between geographies without an increase in wallet size.

Reed Hastings of Netflix has a famous saying - They are not in the streaming or content business. Rather they are in the business of getting our attention. So, Mall Mgt has to think beyond "retail sales" per say and think along the lines of "how do I get you to my mall when you are free? How do I provide instant value to propel you to spend?" I would say many mall operators have plenty of experience surviving the previous "apocalypse" that E-commerce sought to bring.

That said, it would be naive to believe that there wouldn't be an impact based on what we have seen at HK-Shenzhen in the past two years, although I would argue that dynamics aren't exactly very similar. Just like how e-commerce bought about challenges and obsoleted some businesses, mall operators will also need to evolve. The best-in-class ones will continue to strive and prosper.