CapitaLand Investment Weathers Economic Headwinds: A Deep Dive into its 9MFY2023 Earnings

November 9, 2023

CapitaLand Investment Limited (SGX: 9CI), with its towering presence in the real estate investment landscape, has navigated through economic turbulence to deliver a mixed bag of results for the 9-month financial year ended 30 September 2023 (9MFY2023).

Their financial update reveals a slight contraction in revenue, yet the firm has managed to pivot with remarkable agility, particularly in its fee income-related business, which thrived against the odds.

Here is a look at some of the key highlights from its earnings report.

Overall Revenue Declines, Fee Income Rises

CapitaLand Investment’s revenue declined by 3% year-over-year (yoy) to S$2.09 billion for the 9MFY2023. The real estate investment segment experienced an 8% drop to S$1.44 billion. However, this was offset by a notable 9% increase in fee income-related business, amounting to S$799 million, signalling robust growth in the company’s service-oriented operations.

Fundraising and Listed Funds Performance

A highlight of CapitaLand Investment’s financial health is its private funds management, which raised a remarkable S$3.5 billion, marking a 42% increase yoy. Its listed funds also showed active portfolio reconstitutions totalling $1.4 billion, with equity raising of $1 billion. The listed funds maintained strong occupancy rates of 90% and above, suggesting stable demand for CapitaLand Investment’s real estate assets.

Net Property Income and Lodging Segment Shine

Net property income (NPI) saw an upward trend across all funds, reflecting the profitability of the company’s property investments. The lodging management segment, which includes the Oakwood brand, soared by 31% yoy, benefitting from a strategic shift towards an asset-light model, with 82% of its units under management and franchise contracts.

Geographical Performance and Revenue Metrics

CapitaLand Investment’s revenue per available unit (RevPAU) climbed by 25% yoy to S$89. Notably, North Asia ex-China, with Japan being a significant contributor, saw an impressive 110% yoy growth in RevPAU, marking it as the fastest-growing region for CapitaLand Investment.

Commercial Management and Total Transactions

The commercial management revenue experienced a 6% yoy increase, which is a positive indicator for the group’s commercial assets operations. However, the group’s total transactions plunged by 42% yoy to S$3.8 billion, with asset divestments worth S$1.2 billion.

Financial Stability

CapitaLand Investment’s financial leverage, as indicated by the net debt-equity ratio, has slightly increased to 0.55x from 0.52x at the end of the previous fiscal year. The implied interest cost has risen from 3.1% to 3.9%, but the interest coverage ratio stands firm at 3.7x, suggesting that the group can comfortably service its debt. The group maintains a solid liquidity position with $6.7 billion in cash and undrawn facilities.

Weighing the Scales of Investment in CapitaLand Investment

In the grand chessboard of investment opportunities, CapitaLand Investment exemplifies a strategic savant, adeptly manoeuvring through a complex global economic landscape. Their shift towards more resilient, service-based revenue streams is a testament to their agility and potential as a sturdy investment in turbulent times. For the discerning investor, CapitaLand Investment’s latest financial narrative could signal a call to action—albeit one that should be measured against the inherent risks of market volatility. As with any investment, due diligence is paramount, but CapitaLand’s recent endeavours offer a compelling case for those looking to diversify their portfolio with a touch of real estate finesse. The question remains: are you ready to make your move with CapitaLand Investment as your next strategic advance?

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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