Introduction
This in‐depth report provides a detailed analysis of CapitaLand Investment Limited (CLI), a prominent global real asset manager headquartered in Singapore. The report, issued by OCBC Investment Research Private Limited on 28 February 2025, covers CLI’s strategic transition towards an asset‐light model, strong focus on recurring income, and its efforts in capital recycling and inorganic growth. Accompanying the deep dive into CLI are comparative valuation metrics and financial analyses of key global peers including Blackstone Inc, Charter Hall Group, ESR Group Ltd, and Goodman Group.
CapitaLand Investment Limited (CLI)
Investment Thesis and Strategy
CLI is on the hunt for growth as it shifts its core operations towards an asset‐light business model with an emphasis on recurring fee-based income streams. Management is actively targeting growth through management and franchise contracts in its lodging segment – a segment that generated SGD343 million in fee revenue for FY24, with an ambitious target to exceed SGD500 million by 2028. Furthermore, CLI’s fund management business is set for expansion with a goal to grow funds under management (FUM) from around SGD117 billion as at 31 December 2024 to SGD200 billion by 2028. The firm is also looking to deploy capital from significant divestments to fuel organic and inorganic growth, including potential mergers and acquisitions.
Financial Performance Highlights
In FY24, CLI demonstrated mixed performance. The headline profit after tax and minority interests (PATMI) surged by 165% year-on-year (YoY) to SGD479 million, even as the operating PATMI – after stripping out gains/losses from divestments, revaluations and impairments – declined by 10% to SGD510 million. Revenue figures in FY24 edged up by 1% YoY to SGD2,815 million. Despite the softer operating PATMI, CLI maintained an unchanged core cash dividend of 12 Singapore cents per share along with a special dividend-in-specie (DIS) of 0.031 CapitaLand Integrated Commercial Trust (CICT) units per CLI share.
Growth Initiatives and Capital Recycling
CLI’s growth strategy has been strongly influenced by strategic mergers and acquisitions. With an 18% increase in FUM to SGD117 billion in FY24—bolstered by contributions of SGD5 billion from new and existing funds and strategic acquisitions such as SC Capital Partners and Wingate Group—the company’s emphasis on fee income is underpinned by its fee-income related business, which comprised 39% of FY24 revenue but contributed to 62% of operating PATMI. Additionally, the divestment of assets amounting to SGD5.5 billion (gross value) allowed CLI to significantly reduce its balance sheet assets from SGD8.6 billion to SGD4.3 billion and improve its net gearing ratio dramatically.
ESG Commitment and Governance Standards
CLI continues to lead in environmental, social, and governance (ESG) standards. Having upgraded its ESG rating to the highest level in February 2022, the company has set an ambitious objective to achieve green ratings for all its properties by 2030. CLI is also at the forefront among its peers in securing green building certifications – with 58% of its global portfolio already meeting these standards – and maintains strong governance policies supported by a fully independent audit committee.
Valuation and Investment Recommendation
CLI is currently rated as a BUY by the research team, based on the expectation of total returns (excluding dividends) in excess of 10% from the current price. The latest fair value is estimated at SGD3.71 per share, down from a previous estimate of SGD3.93 after adjustments. CLI’s financial solidity, robust capital recycling strategy, and the shift to an asset‐light business model further reinforce its appeal to investors.
Peer Comparative Analysis
In addition to its own strengths, CLI’s valuation and performance were analyzed in comparison with several global real asset managers. Detailed metrics across key ratios provide insights into the relative market positioning of CLI against competitors such as Blackstone Inc, Charter Hall Group, ESR Group Ltd, and Goodman Group.
Blackstone Inc (BX)
Blackstone Inc is evaluated with robust valuation multiples. For FY25E and FY26E, Blackstone Inc exhibits a Price/Earnings ratio of 27.7 and 22.5 respectively, which are higher than CLI’s figures, reflecting its premium market positioning. The company’s EV/EBITDA ratios stand at 12.0 for FY25E and 10.7 for FY26E, and its dividend yield projections are very attractive at 23.7% for FY25E and 18.9% for FY26E. These figures underline Blackstone’s strength as a well-established player in the global asset management space.
Charter Hall Group (CHC.AX)
Charter Hall Group features competitive valuations with Price/Earnings ratios of 21.0 for FY25E and 19.4 for FY26E. The Price/Book ratio is relatively low at 2.8 for FY25E, declining slightly to 2.6 in FY26E, which could appeal to value-focused investors. Its EV/EBITDA multiples and dividend yield, at 14.8 (FY25E) and 13.8 (FY26E) respectively, along with a stable ROE profile, indicate steady performance in the real estate investment sector.
ESR Group Ltd (1821.HK)
ESR Group Ltd is another competitor highlighted in the report. The company’s valuation multiples show a Price/Earnings ratio of 31.2 in FY25E, which narrows to 17.5 by FY26E. The Price/Book ratio remains constant at 0.8, and the EV/EBITDA ratio is also maintained at 0.8 for both forecast years. Dividend yield expectations are modest, with estimates of 18.2% in FY25E and 13.3% in FY26E, making ESR Group a focused player in the market.
Goodman Group (GMG.AX)
Goodman Group’s valuation comparison shows Price/Earnings ratios of 27.0 for FY25E and 24.5 for FY26E. The Price/Book ratios are low at 2.7 and 2.4 respectively, indicating potential undervaluation. Furthermore, EV/EBITDA ratios are poised at 28.3 for FY25E and 24.4 for FY26E, complemented by a dividend yield of 0.9% for FY25E and 1.0% for FY26E. Goodman’s metrics suggest that it remains a competitive player with significant appeal for income-oriented investors.
Comprehensive Financial Overview
The detailed financial summary for CLI includes key figures such as:
- Revenue: SGD2,815 million for FY24 with modest YoY growth.
- Profit from Operations: Recorded at SGD661 million in FY24 with an upward trend anticipated in future estimates.
- Headline PATMI: An impressive SGD479 million in FY24, despite operating PATMI showing a modest decline to SGD510 million.
- EPS: Basic EPS evolved from 9.5 Singapore cents in FY24 to an estimated 13.2 and 14.4 cents in FY25E and FY26E respectively.
- Key Ratios: With PER at 27.6x in FY24 (expected to reduce to 19.8x and 18.2x by FY25E and FY26E respectively), and a consistent P/NAV of 1.0x across years, CLI’s financial parameters indicate a balanced risk-reward profile.
Additionally, profitability ratios including Return on Equity (ROE) improved modestly from 3.5% in FY24 to projections of 4.9% and 5.6% by FY25E and FY26E. Cash dividend yield remains stable at 4.6% over the forecast period.
Income Statement and Credit Metrics
The income statement reveals the dynamic shifts in CLI’s operational performance over the past five years. Notable observations include a revenue base that started at SGD1,983 million in FY2020 and has grown to SGD2,815 million in FY24. Operating income and margins have shown marked recovery after challenging periods, supporting CLI’s turnaround in normalized income for FY24. Moreover, the steady reduction in debt metrics – highlighted by improvements in Total Debt/EBIT and Net Debt/EBIT ratios – underlines CLI’s reinforced financial flexibility and capital management discipline.
Conclusion
In summary, CapitaLand Investment Limited is well-positioned to leverage its transition to an asset-light business model, catalyze growth through robust fee income, and benefit from strategic divestments and capital recycling. The BUY recommendation reflects confidence in CLI’s ability to deliver total expected returns above 10% (excluding dividends). When viewed against its global peers – including Blackstone Inc, Charter Hall Group, ESR Group Ltd, and Goodman Group – CLI’s proactive strategy and disciplined financial management stand out in a competitive real asset management landscape.
This comprehensive analysis, based solely on the detailed report from OCBC Investment Research Private Limited dated 28 February 2025, offers investors a deep dive into the current performance, strategic outlook, and competitive positioning of CLI and its international counterparts.
