Brokers’ take: Analysts expect CICT will be key beneficiary of Singapore reopening

ANALYSTS are positive on CapitaLand Integrated Commercial Trust : C38U 0% (CICT) as it can likely ride on the recovery of the office and retail sectors in Singapore to become one of the key beneficiaries of the Republic’s reopening.

DBS Group Research, which has a “buy” call on the counter, raised its target price to S$2.70 from S$2.45, as it expects the real estate investment trust (Reit) will post stronger earnings growth in FY2023 as the economy returns to normal.

As the largest commercial Singapore Reit (S-Reit), CICT is likely poised to ride on the retail recovery, as well as the strong upward trajectory in the Singapore office market, the research team said in a report on Thursday (May 5).

It estimated that CICT could deliver a 6 per cent 2-year compound annual growth rate (CAGR) which is one of the strongest among peers.

As for Maybank, it expects easing negative retail reversions, improving net property income, as well as tailwinds from the office sector recovery to provide stronger fundamentals for CICT in FY2022.

In a report on Thursday, analyst Chua Su Tye raised his target price to S$2.60 from S$2.55, and maintained his “buy” call on the counter.

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He said CICT’s valuations are “compelling”, and also sees upside from new acquisitions, as the Reit’s manager may be eyeing a larger Singapore acquisition from its sponsor.

Taking a different view, Jefferies lowered its target price on the counter to S$2.27 from S$2.30, as higher utility costs, frictional vacancies and timing differences between divestments, acquisitions, revenue recognition and cash flow may weigh on dividends.

In a report on Wednesday, analyst Krishna Guha maintained his “hold” call on the counter, as the current unit price has likely priced in the 10 per cent distribution per unit growth expected for the year.

However, Guha said further re-opening measures announced recently should help operations.

On Apr 29, CICT posted a 0.5 per cent on-year rise in its first quarter net property income (NPI) to S$248.3 million, with NPI growth recorded in its retail, integrated development and office earnings. Gross revenue for the quarter also rose 1.5 per cent on year to S$339.7 million.

Units of CICT were trading at S$2.23 at 3.44 pm on Friday, down S$0.08 or 3.5 per cent.