Maybank Kim Eng has reinstated coverage on CapitaLand Integrated Commercial Trust (CICT) with a “buy” rating and target price of $2.50.
The brokerage notes that CICT’s valuations are “undemanding” given its FY21 dividend yield of 5.2% and book value versus history and peers.
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Moreover, it believes that CICT will see a recovery in distribution per unit in 2021 with earnings upside as the REIT leverages added development capacities into value-accretive asset enhancement initiatives and redevelopment opportunities.
Improvement in the retail industry will be an additional boost too.
According to Maybank KE, negative reversions are expected to moderate in 2021 as social-distancing measures continue to ease and retail recovery gains traction.
SEE: CapitaLand Integrated Commercial Trust is currently the biggest S-REIT 'at a bargain': DBS
Shopper traffic has remained stable since Phase 2’s reopening as tenants’ sales have gradually improved, returning to 89% of pre-Covid-19 levels, versus 85% in 1H20, it says.
“…there’s optimism as the rent-relief cycle seen in 3Q20 has peaked, and tenants expanding again in 2021-22,” Maybank KE analyst Chua Su Tye writes in a note dated Dec 15.
As at 11.52 am, CICT was down 3 cents or 1.4% at $2.11 with 6.7 million shares changed hands.
