What Investors Should Know About CapitaLand Retail China Trust’s Latest Earnings and Valuation
CapitaLand Retail China Trust (SGX: AU8U) is a REIT that invests in retail malls in China. It currently has 11 properties in its portfolio.
There are two things to know about the REIT right now: Its latest financial performance and valuation.
Here is a table showing important items from CapitaLand Retail China Trust’s income statement for 2018’s first quarter:
Source: CapitaLand Retail China Trust earnings presentation
We ca see that CapitaLand Retail China Trust had experienced a mixed quarter. Its revenue and net property income fell, but its distribution per unit (DPU) had increased slightly. The REIT attributed its lower top line and net property income to the sale of CapitaMall Anzhen in July 2017, and lower revenue from CapitaMall Grand Canyon.
As of 31 March 2018, the retail REIT clocked in a healthy gearing ratio of 32.5% (which is well below the regulatory limit of 45%), and its occupancy rate is also at an acceptable level of 94.9%.
There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.
The table below shows CapitaLand Retail China Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 42 REITs that are in Singapore’s stock market.
Source: SGX Stock Facts
We can see that CapitaLand Retail China Trust’s valuation is essentially on par with the market average.