CapitaLand Integrated Commercial Trust (CICT)

3Q24 Performance

CapitaLand Integrated Commercial Trust (CICT) has shown a significant increase in its dominance in Singapore’s retail scene. For 3Q24, CICT achieved a positive rental reversion of 9.2% for retail and 11.7% for office spaces. The NPI margin improved by 2.5 percentage points year-on-year to 72.8%, attributed to cost savings from lower utility expenses and a new property management agreement.

Revenue and Growth

Gross revenue for the quarter grew by 1.7% year-on-year, driven by higher rental income despite the absence of income from Gallileo, which has been undergoing an asset enhancement initiative (AEI) since February 2024. The retail portfolio saw positive rental reversion and increased shopper traffic, especially in downtown malls. Notably, occupancy remained high at 99.0% with healthy tenant retention at 86.1%.

Future Plans

CICT is focusing on integrated developments, which are more resilient throughout economic cycles. The trust has committed to maintaining high occupancy rates and enhancing cost efficiency. Future plans include reconfiguring retail spaces at ION Orchard to increase rental income and expand its Singapore portfolio through acquisitions and AEIs.

Financials

CICT has raised funds through its MTN programme, issuing S\$200 million of fixed-rate green notes in October 2024. The trust’s aggregate leverage slightly eased to 39.8%, with an average cost of debt at 3.6%. CICT’s NAV per unit is expected to remain stable at S\$2.06, with a target price of S\$2.59.

NetLink NBN Trust

2QFY25 Performance

NetLink NBN Trust reported a slight miss in its 2QFY25 results due to compressed margins. Despite a 2.5% year-on-year increase in revenue, lower EBITDA and PATMI were recorded, primarily due to higher operating costs and one-off expenses. EBITDA fell by 5.1% year-on-year, while PATMI decreased by 7.4%.

Segment Performance

Residential connections grew by 1.9% year-on-year but softened slightly quarter-on-quarter. Non-residential connections and segmental connections saw slight quarter-on-quarter drops but overall remained stable. Non-RAB revenue surged due to increased installation-related and central office revenue.

Dividend and Debt Management

NetLink declared a higher 1HFY25 final dividend of 2.68 S cents per share, implying an annualized dividend yield of around 5.9%. The trust’s effective average interest rate remained stable at 2.7%, with 74.1% of its borrowings on fixed rates. Management is positive about refinancing opportunities with expected interest rate cuts in FY25.

Future Outlook

NetLink remains a high-yielding, safe-haven stock with stable revenue streams and operating cash flows. The trust is well-positioned to support Singapore’s Smart Nation initiatives and the 5G rollout. The stock maintains a BUY rating with a target price of S\$0.98.

Wilmar International

4Q24 Expectations and Challenges

Wilmar International is poised for a quarter-on-quarter recovery in 4Q24, although year-on-year performance might be lower. Sales recovery trends observed in 3Q24 are expected to continue into the fourth quarter. However, uncertainties loom due to upcoming US elections and weak consumer spending recovery in China.

Segmental Highlights

The Food Products segment is seeing gradual growth, driven by stimulus measures that restore consumer sentiment. The Feed & Industrial Products segment is benefitting from improved refining margins and higher soybean meal demand. The Plantation & Sugar Mill segment is experiencing high CPO prices and better sugar milling contributions due to favorable weather and the end of workers’ strikes.

Financials and Valuation

Wilmar’s net turnover is projected to increase in the coming years, with EBITDA and net profits also expected to grow. The stock offers a decent dividend yield, making it attractive for investors. The upcoming disposal of the Adani-Wilmar stake could lead to a special dividend. The stock holds a HOLD rating with a target price of S\$3.00.

Conclusion

The Singapore market continues to offer promising opportunities with companies like CapitaLand Integrated Commercial Trust, NetLink NBN Trust, and Wilmar International showing robust performance and strategic future plans. Investors should consider these stocks for their potential growth and stable returns in the coming quarters.