OCBC Investment Research analyst Chu Peng has maintained her ‘buy’ rating for CapitaLand China Trust (CLCT) after it announced its 1QFY2021 ended March business update on April 27.
She notes CLCT’s net property income of RMB264 million ($55 million) for the quarter was driven by the performance of its business parks, with occupancy standing at a "healthy" 92.1%, accompanied by "strong rental reversions" recorded for the period.
In addition, Chu notes that CLCT’s retail portfolio showed sequential improvement, with occupancy climbing 0.3 percentage points q-o-q to 94.4% in the 1QFY2021. Tenants’ sales and shopper traffic also improved 47.2% and 52.1% y-o-y respectively, which Chu believes further indicates improving consumer sentiment.
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To that end, she expects less downward pressure on CLCT’s retail rental reversions moving forward.
Chu highlights that CLCT will complete the acquisition of two more business parks - Singapore Hangzhou Science Technology Phase I & II - in the 2QFY2021.
She remains upbeat on CLCT’s outlook for the rest of the year. “We expect CLCT to benefit from the recovery trend in China in FY2021 with the series of macro policies announced by the Chinese government to support the economy and boost consumption, barring the risks of subsequent waves of infections,” she says in her April 28 report.
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Her target price has been marginally lowered to $1.55 (from $1.58 previously) due to a higher risk-free assumption of 1.9%, up from 1.55% previously.
As at 4.26pm, units in CLCT were down 2 cents or 1.44% lower at $1.37.
