CapitaLand China Trust has suffered from price target cuts following a weaker FY2023 that saw distribution per unit down 10.1% y-o-y.
When calculated in RMB, CLCT reported higher gross revenue and net property income of 5.9% and 10.5% y-o-y respectively.
However, given the weakening RMB vs Singdollar, the reporting currency, CLCT ended FY2023 with a slightly lower revenue that's 2% lower versus FY2022, although net property income was up 2.5% to $117.5 million.
Due to higher interest cost and forex, the REIT reported a lower distributable income of $113.8 million, down 9.4% y-o-y.
Backed by CapitaLand, CLCT owns a portfolio of ten malls, five business parks and logistics parks across 12 cities in China.
While its retail assets continued to do well following the end of the pandemic, CLCT's so-called "new economy" logistics assets did not.
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In her Jan 30 note, Ada Lim of OCBC Investment Research says CLCT is still seen as a beneficiary of China’s reopening and pro-growth policies in the longer term.
She believes that the recent stimulus measures by the Chinese government as potential green shoots, but expects the recovery to pan out as a multi-year story.
"We turn more conservative on our forecasts and increase our cost of equity assumption amidst a more operating challenging environment," adds Lim, who has lowered her fair value from $1.02 to 95 cents, while keeping her "buy" call.
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In their Jan 31 note, Geraldine Wong and Derek Tan of DBS Group Research point out that CLCT continues to experience weakness in the new economy segments and a depreciating RMB against the Singdollar.
They've lowered their target price from $1.20 to $1.05, to factor in slower negatives for CLCT's logistics segment and the divestment of Shuangjing mall, among others.
Nonetheless, with a yield of more than 8%, and with the counter trading at just 0.6x book value, they've kept their "buy" call.
