SINGAPORE (Sept 15): OCBC Investment Research says CapitaLand Retail China Trust (CRCT) could get a leg up from an omni-channel strategy that could be implemented across its portfolio in the future.
“We note that CapitaLand Retail China Trust's sponsor, CapitaLand, has been actively advancing its omni-channel or offline-and-online (O&O) strategy,” says OCBC lead analyst Deborah Ong in a report on Friday.
Ong says that these O&O solutions may eventually be replicated across CRCT’s portfolio, which would place the REIT in an advantageous position.
CapitaLand in August inked a deal with e-commerce giant Alibaba to manage the 80,000 sqm Alibaba Shanghai Center in China. CapitaLand will oversee the pre-opening and management of one of the four office towers as well as the shopping podium.
The group has also launched its first smart mall, CapitaMall Xinduxin, in Qingdao.
In Singapore, CapitaLand has signed an agreement to launch an exclusive online mall on Lazada Singapore, which will see the aggregation of the offerings of retailers in its Singapore malls on Lazada’s online platform.
“As more and more shoppers make purchases both offline and online, we recognise that omni-channel retailing is the way to go for our retailers to maximise their reach and market share,” CapitaLand Mall Asia CEO Jason Leow said last month.
See: CapitaLand inks deals with e-commerce giants Alibaba, Lazada Singapore
As part of the O&O strategy, CapitaLand will roll out two unmanned click-and-collect lounges at Plaza Singapura and Bugis+ for online shoppers to collect and return their parcels.
“Going forward, we see a couple of positive catalysts for CRCT’s DPU growth,” says OCBC’s Ong.
The manager of CRCT in the 2Q ended June announced distribution per unit (DPU) of 2.62 cents, bringing DPU for the first half of 2017 to 5.36 cents – just 0.8% higher than a year ago.
See: CapitaLand Retail China Trust posts 0.8% higher 1H DPU of 5.36 cents
OCBC is keeping its “hold” call on CRCT. The research house is raising its fair value estimate to $1.59, from $1.55 previously, mainly due to the tweaking of currency assumptions on the back of recent strength in the renminbi.
As at 12.58pm, units in CRCT are trading 1 cent lower at $1.61, implying a projected DPU yield of 6.6% for FY17F.
Year to date, units in CRCT have climbed 17.5%.
