CapitaLand Integrated Commercial Trust (CICT SP)

Share Price: S\$2.02
Target Price: S\$2.59
Upside: +28.2%

CapitaLand Integrated Commercial Trust (CICT) remains a dominant player in Singapore’s retail scene. The trust reported a positive rental reversion of 9.2% for retail and 11.7% for office in the first nine months of 2024. The net property income (NPI) margin improved by 2.5 percentage points year-over-year to 72.8% in Q3 2024. This improvement was attributed to cost savings from lower utility expenses and a new property management agreement.

CICT is actively working on reconfiguring the upper floors and obtaining tax transparency for ION Orchard. Management is focused on expanding in integrated developments, which are more resilient throughout economic cycles.

Q3 2024 Results

CICT’s gross revenue increased by 1.7% year-over-year in Q3 2024, driven by higher rental income despite the absence of income from Gallileo, which is undergoing an asset enhancement initiative (AEI). The NPI margin expanded to 72.8%, resulting in a 5.4% year-over-year increase in NPI.

• Gross Revenue: S\$397.9 million (+1.7% yoy)
• Net Property Income: S\$298.8 million (+5.4% yoy)

Retail Portfolio

The retail portfolio achieved a positive rental reversion of 9.2% in 9M24, with suburban malls at 9.0% and downtown malls at 9.4%. Occupancy remained unchanged at 99.0% in Q3 2024, with healthy tenant retention at 86.1%. Shopper traffic recovered by 3.7% year-over-year in 9M24.

Office Portfolio

The office portfolio reported a positive rental reversion of 11.7% in 9M24. Occupancy was stable at 97.4% for Singapore and 88.4% for Australia in Q3 2024. However, occupancy in Germany eased to 82.7% due to competition from new supply.

Financials and Outlook

CICT’s aggregate leverage eased slightly to 39.8% as of September 2024, with an average cost of debt at 3.6%. Management expects cost of debt to remain at high-3% in 2025. The trust remains focused on strengthening its Singapore portfolio and exploring opportunities in integrated developments.

NetLink NBN Trust (NETLINK SP)

Share Price: S\$0.91
Target Price: S\$0.98
Upside: +8.8%

NetLink NBN Trust reported a slight miss in its 2QFY25 results as margins compressed. Despite higher revenue of S\$103.9 million (+2.5% yoy), EBITDA decreased by 5.1% year-over-year to S\$70.1 million, and PATMI fell by 7.4% year-over-year to S\$22.8 million.

2QFY25 Results

• Revenue: S\$103.9 million (+2.5% yoy)
• EBITDA: S\$70.1 million (-5.1% yoy)
• Profit After Tax: S\$22.8 million (-7.4% yoy)

Segmental Performance

Despite lower prices, revenue from regulated asset base (RAB) and non-RAB revenue increased. Residential connections grew by 1.9% year-over-year, while non-residential connections saw a slight drop due to increased churn and consolidation of two Requesting Licensees.

Financials and Outlook

NetLink declared a higher 1HFY25 final dividend of 2.68 S cents/share, implying an annualized dividend yield of around 5.9%. The effective average interest rate remained stable at 2.7%, with 74.1% of borrowings on fixed rates. NetLink is positioned as a high-yielding, safe-haven stock with growth opportunities from the digital economy, 5G rollout, and Singapore’s Smart Nation initiatives.

Wilmar International (WIL SP)

Share Price: S\$3.13
Target Price: S\$3.00
Upside: -4.2%

Wilmar International’s management provided updates indicating a recovery in 4Q24, albeit lower year-over-year. The company expects a core net profit of US\$340-350 million for 4Q24. However, uncertainties loom with upcoming US elections and weak consumer spending in China.

Q4 2024 Outlook

Wilmar is poised for a better 4Q24 quarter-on-quarter, driven by the following segmental highlights:

• Food Products: Sales volumes are expected to improve as stimulus measures restore consumer sentiment. Flour and rice operations in China benefit from lower raw material costs.
• Feed & Industrial Products: Refining margins for tropical oils are expected to improve, and soybean crushing margins have turned positive. Higher soybean meal demand and rising hog prices contribute to recovery in animal feed demand.
• Plantation & Sugar Mill: CPO prices remain high due to lower palm oil production and Indonesia’s higher biodiesel blending. Sugar milling is expected to see better earnings contribution as the workers’ strike has ended and good weather continues.

Financials and Outlook

Wilmar maintains its earnings forecasts for 2024-26 at US\$1.19 billion, US\$1.58 billion, and US\$1.86 billion respectively. The company’s recovery is contingent on consumer sentiment and market conditions, with potential upside from the disposal of its Adani-Wilmar stake. The stock offers a decent dividend yield, making it an attractive option for investors.