CapitaLand China Trust (AU8U) H2 2024 earnings summary

Executive summary

• Portfolio remains predominantly retail, contributing 70.7% of gross rental income, with high occupancy and positive tenant sales growth; business parks and logistics assets also significant but faced headwinds from lower occupancies and rents.

• Retail assets showed resilience, supported by AEI (asset enhancement initiatives), with three AEI malls delivering a blended ROI of about 14% and strong like-for-like NPI growth.

• Divestment of underperforming malls and successful AEIs improved asset quality and balance sheet, but overall revenue and NPI declined due to weaker business park/logistics performance and discontinued tax incentives.

• Distribution per unit (DPU) dropped 16.2% year-over-year to 5.65 S cents, impacted by lower business park/logistics performance, FX losses, and a weaker RMB.

Financial highlights

• Full-year portfolio revenue declined 3.9% to RMB 1,837.6 million and net property income (NPI) dropped 5.8% to RMB 1,219.1 million year-over-year.

• Amount available for distribution was S$96.8 million (-15.0% YoY); DPU was 5.65 S cents (-16.2% YoY).

• AEI malls delivered revenue growth of 8.7% and NPI growth of 13.7% year-over-year, with blended ROI of 14%.

• Portfolio valuation declined 1.7% to RMB 23,957 million, with cap rates largely unchanged.

• Trading/distribution yield stands at 7.7%.

Outlook and guidance

• Retail portfolio expected to remain stable with strong occupancy, benefiting from government policies and ongoing AEIs, though rental reversions may stay slightly negative due to subdued consumer sentiment.

• Business parks to face continued pressure from oversupply and cautious business sentiment, with negative single-digit reversions and NPI weakness expected.

• Logistics parks stabilized with high occupancy, but sector remains exposed to oversupply, low demand, and geopolitical risks.

• Management plans to further increase RMB-denominated debt to about 50% of the loan book by end-2025 and focus on asset rejuvenation and tenant mix optimization.

• China’s GDP grew 5% in 2024; further fiscal and monetary stimulus expected in 2025 to support consumption and innovation.