CapitaLand Investment (CLI): A Global Sustainability Leader

CapitaLand Investment (CLI) remains steadfast in its position as a global leader in sustainability. The company has been recognized with its inclusion in the Dow Jones Sustainability World Index (DJSI World) and Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific) for 2024. Impressively, this marks CLI’s 13th and 16th consecutive years on these respective indexes. Additionally, CLI continues as a constituent of the MSCI ESG Leaders Index for the 11th year, maintaining its MSCI ESG AAA rating for the third consecutive year.

These accolades underscore CLI’s commitment to meeting ambitious Environmental, Social, and Governance (ESG) targets, as well as its ability to integrate sustainability into its operations. CLI’s efforts in decarbonization include the establishment of a 21MW solar power plant in India and the adoption of the Cooling-as-a-Service system at three flagship properties in Singapore. The company’s Climate Resilience Report further emphasizes its proactive stance on managing climate-related risks.

From a financial standpoint, CLI is capitalized at \$13 billion, trades at 18x forward PE, and boasts a consensus one-year target price of \$3.55, representing a potential upside of 36%. The monetization of its 50% stake in Ion Orchard to CapitaLand Integrated Commercial Trust (CICT) raises the prospect of a special dividend, complementing its usual 12 cents per share payout. Lim & Tan Securities recommends an “Accumulate” rating for CLI, citing its attractive valuations and leadership in ESG initiatives.

SingPost: Addressing Whistleblowing Concerns and Strategic Divestments

Singapore Post (SingPost) faced whistleblowing allegations earlier in 2024, leading to investigations into the manual keying of “delivery failure” (DF) status codes by three staff members in its International Business Unit (IBU) Operations. These codes were allegedly entered without proper documentation to avoid contractual penalties. The disciplinary actions revealed that the issue was isolated and confined to one specific customer contract. Corrective measures have since been implemented to prevent future occurrences.

SingPost also reaffirmed its strategic direction, focusing on divesting non-core businesses, such as its Australian operations. The sale process is progressing, with shareholder approval expected in February 2025. Additionally, SingPost is investing in automation and electrification of its vehicle fleet, aligning with its sustainability goals. The company’s market cap stands at S\$1.17 billion, trading at 18x forward PE and 1x P/B. Lim & Tan Securities maintains an “Accumulate on Weakness” rating for SingPost, citing its long-term strategy of monetizing assets and returning proceeds to shareholders.

Chinese Developers: Cautious Optimism Amid Sector Challenges

The Chinese real estate sector continues to grapple with persistent challenges, including declining home prices and unfinished projects. A Bloomberg gauge of the sector showed a modest 2.5% year-to-date gain by December 23, 2024, but analysts remain skeptical about sustained recovery. Morgan Stanley predicts a 12% drop in sales and high single-digit declines in home prices for 2025.

Despite the gloomy outlook, state-owned developers such as China Overseas Land & Investment and China Resources Land are positioned for valuation upside. Analysts anticipate market consolidation, allowing these leading developers to capture more market share as privately-owned players focus on deleveraging. However, structural challenges and weak fundamentals may continue to weigh on the sector.

Macro Market News: A Challenging 2025 Ahead

BCA Research forecasts a tough 2025 for the global economy, marked by a potential US recession starting in May 2025. The S&P 500 is projected to close the year at 4,452, with defensive sectors outperforming. Treasury yields are expected to experience volatility, with the 10-year yield dropping to 3.25% by year-end. Commodities and Bitcoin are also forecasted to weaken.

China’s economic challenges, particularly in its real estate sector, are expected to persist. While local governments have introduced measures to ease home purchase restrictions, analysts believe these piecemeal efforts will only yield short-term gains. Structural issues remain a significant drag on valuations.

Dividend Announcements

Several companies have announced their dividend payouts and special distributions:

• FNN: 4 cents final dividend, payable on January 28, 2025.
• Frasers Property Ltd: 4.5 cents final dividend, payable on February 14, 2025.
• PNE Industries Ltd: 2 cents final dividend, payable on February 14, 2025.
• Thai Bev: THB47 cents final dividend, payable on February 28, 2025.
• LHN Ltd: 1 cent final and 1 cent special dividend, payable on February 21, 2025, and May 30, 2025, respectively.

SGX Watch-List Companies

The report lists 33 companies currently under the SGX Watch-List, including notable additions such as Addvalue Technologies, Renaissance United, and Telechoice, which were placed under scrutiny in December 2023. Companies on the Watch-List face challenges in meeting the listing requirements and are monitored for their financial and operational stability.