Why are CapitaLand Investment shares falling?

• CapitaLand Investment Limited (SGX: 9CI) share price fell over 7% on Thursday (11 August 2022)
• The property group’s earnings fell 32% in its latest results
• The stock is up 11% this year
• Keen to trade CLI shares? Open an account with us to start today.

CapitaLand Investment reports lower profit in first half

CapitaLand Investment (CLI) saw total profit after taxes and minority interests (PATMI) decline 38% year-on-year (YoY) to S$433 million in the first half (1H) of 2022.

This was due to lower portfolio gains of S$87 million from asset recycling compared to S$438 million in the ‘exceptionally active’ 1H 2021 period, the group stated.

However, operating PATMI grew by 31% to S$346 million in 1H of 2022. This came on the back of higher fee income from fund and lodging management, higher contributions from lodging properties in most geographies, as well as better performance at its retail properties in Singapore and Malaysia.

Revenue rose 29% YoY to S$1,354 million, boosted by higher contributions from fee income-related businesses and real estate investment business.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the period came in 32% lower YoY at S$873 million. This was mainly due to lower portfolio gains from asset recycling, rental rebates extended to retail tenants in China, and the absence of contributions from divested assets in Japan, Singapore and China.

Portfolio gains in 1H 2022 were mostly from the divestment of JCube and CapitaSky (formerly known as 79 Robinson Road) in Singapore.

CLI stock price: what’s the latest forecast?

CLI shares fell as much as 7.3% following the release of its latest results. The counter was the fourth most traded as of Thursday 13:00 SGT, with over 22 million shares exchanging hands.

Across the board, CLI shares have an average rating of ‘outperform’ and an average price target of S$4.30 a share, according to the latest SGX StockFacts data.

The price target equates to an upside potential of roughly 11%, based on the stock’s last traded price of S$3.88.

CIMB’s equity research team maintained a rating of ‘add’ and target price of S$4.59 on the stock in early July. The price estimate was pegged to an assumed 10% discount to a sum-of-parts revalued net asset value of S$5.10.

‘We believe that as CLI continues to lighten its balance sheet and accelerate the growth of its fee income business, there is room for a further re-rating of the valuation of its fund management business,’ the analysts wrote.

Shares are up 11% on year-to-date, but down slightly in the last one month.

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