CapitaLand China Trust (AU8U) H1 2024 earnings summary

Executive summary

• Portfolio reshaped towards China domestic market, focusing on consumption and innovation-led growth, with gross revenue for 1H 2024 at RMB 925.9 million (down 2.3% YoY) and net property income (NPI) at RMB 631.3 million (down 4.9% YoY), mainly due to logistics and business park weakness.

• Distribution per unit (DPU) for 1H 2024 was 3.01 Singapore cents, down 19.5% year-over-year but stable sequentially, supported by retail recovery and finance cost savings.

• Retail portfolio showed strong operational recovery, with shopper traffic up 14.1% and tenant sales up 6.6% year-over-year, surpassing pre-COVID levels, and high occupancy at 97.8%.

• Divestment of non-core assets, including CapitaMall Shuangjing, and active capital management to strengthen the balance sheet.

Financial highlights

• Gross revenue: RMB 925.9 million (▼2.3% YoY); NPI: RMB 631.3 million (▼4.9% YoY); distributable income to unitholders: S$51.3 million (▼18.7% YoY); DPU: 3.01 S cents (▼19.5% YoY, ▲0.3% sequentially).

• NAV per unit: S$1.19 as of 30 June 2024.

• Gearing at 40.8%, below MAS 50% limit; interest coverage ratio (ICR) at 3.2x; average cost of debt at 3.49%.

• Portfolio valuation: S$4.8 billion across 18 properties in 12 cities.

• Portfolio occupancy: Retail 97.8%, Business Park 90.5%, Logistics Park 90.3%.

Outlook and guidance

• Retail segment expected to continue positive trajectory with improving traffic, sales, and occupancy, benefiting from domestic consumption and completed asset enhancements.

• Logistics segment faces continued supply pressure and weaker demand, with focus on improving occupancy and repositioning assets.

• Business parks to face continued pressure in Hangzhou and Xi'an, but positioned to capture opportunities from government support for technology sectors.

• China’s government targets 5% GDP growth for 2024, with reforms to boost innovation and consumption.

• No material repeat of one-off withholding tax in second half; cost management and synergies prioritized.