10 Quick Things Investors Should Know About CapitaLand Retail China Trust’s Latest Earnings
Last week, CapitaLand Retail China Trust (SGX: AU8U), or CRCT, released its 2018 second-quarter (2Q 2018) earnings update. As a quick introduction, CRCT is a Singapore-based real estate investment trust (REIT) investing in retail real estate in China. The trust’s shopping malls are located in China, Hong Kong and Macau.
Here are 10 things investors should know about CRCT’s latest results:
1. Gross revenue for the reporting quarter declined 4.6% to S$56.3 million while net property income reduced by 5.9% to S$37.6 million.
2. Yet, distribution per unit (DPU) grew 0.8% year-on-year to 2.64 cents.
3. Based on CRCT’s annualized DPU of 10.87 cents and its closing unit price of S$1.57 as of 27 July 2018, the REIT has a trailing distribution yield of 6.9%.
4. As of 30 June 2018, the REIT’s gearing stood at 32.1%, which is a safe distance from the regulatory ceiling of 45%.
5. The REIT’s portfolio had a committed occupancy rate of 97.4% at the end of the quarter.
6. The weighted average lease expiry (by total rent income) was at 2.9 years, as of 30 June 2018.
7. In the latest quarter, the average rental reversion rate was up 10.5% as compared to last year.
8. Shopper traffic was down 1.5% year-on-year for 2Q 2018.
9. Average monthly tenants’ sales was up 1.2% in the reporting quarter as compared to the same period last year.
10. Here are some comments provided by the REIT on China’s economy and retail industry:
“In 2Q 2018, China’s GDP registered a stable growth of 6.7% year-on-year to RMB41.9 trillion, signifying a good momentum for 2018 as the national economy moves towards high-quality development. National retail sales increased 9.4% year-on-year to RMB18 trillion, while national urban disposable income and expenditure per capita grew 8.7% and 6.8% respectively.
China’s retail landscape is decentralising as new retail zones are created to cater for developing residential areas. In 1Q 2018, new retail supply slowed with a total of 780,000 sqm of new stock added whereby more than 80% was located in submarkets or emerging areas.
Notwithstanding the short-term volatility arising from current political sentiments, CRCT’s portfolio of family-oriented malls remains well-positioned to tap on continued urbanisation, China’s transition towards a consumption-based economy, as well as the rising affluence of a growing middle-class segment and higher-spending millennials.”