CGS International
May 1, 2025
Capitaland Investment (CLI): Strong Recurring Income and Strategic Growth Position Singapore Giant for Upside
Overview: Solid Start to 2025 for Capitaland Investment
Capitaland Investment (CLI), a leading Singapore-based property development and investment company, delivered a robust update for 1Q25, reinforcing its position as a defensive and growth-oriented real estate player. The company posted 1Q25 revenue of S\$496 million, representing 23% of full-year forecasts. Despite a headline year-on-year revenue drop of 23.7% due to the deconsolidation of Capitaland Ascott Trust, underlying revenues remained stable, reflecting resilient fundamentals.
CLI’s fee income-related business (FRB) was the key driver, growing 3% year-on-year to S$281 million and accounting for 57% of revenue. Real estate investment business (REIB) revenue fell 6% on a like-for-like basis, impacted by asset divestments. The company’s net debt-to-equity ratio declined to 0.39x at the end of 1Q25, highlighting strong financial discipline.
Key Highlights: Strategic Growth and Capital Recycling
– CLI is focused on growth thematics: logistics, self-storage, living and wellness, private credit, and data centres. – The group is leveraging partnerships (notably with SC Capital Partners and Wingate) to scale fund management (FUM) and optimize equity. – Active cost rationalization is underway, with ongoing recycling of on-balance sheet assets and right-sizing of fund stakes.
1Q25 Segment Performance: Fee Income Drives Growth
- FRB revenue rose 3% YoY, driven by:
- Listed funds management (+3%)
- Lodging management (+2%)
- Commercial management (+4%)
- Fund fees averaged 46 basis points. FUM stood at S\$117 billion at end-1Q25.
- CLI invested approximately S\$1.5 billion year-to-date, with 30% via listed funds.
- In April 2025, CLI announced the launch of the first international-sponsored China REIT, focused on retail properties in China. CLI, Capitaland China Trust (CLCT), and Capitaland Development (CLD) will jointly hold a 20% strategic stake, creating a new platform for capital recycling and FUM growth.
Real Estate Investment Business (REIB): Impact of Asset Divestments
- REIB revenue fell 6% YoY due to the sale of 16 US multifamily properties and Ascendas iHub Suzhou.
- Lodging management saw a 5% YoY rise in RevPAU, led by strong performance in Japan, South Korea, and Europe, alongside the opening of 1,800 new properties.
- CLI’s on-balance sheet assets stood at S\$4.3 billion at end-1Q25, with 75% in China and the rest diversified across Europe, USA, Southeast Asia, and India.
Investment Thesis: Add Rating Maintained, Strong Upside Potential
CGS International reiterates its Add rating and maintains a target price of S\$4.30, based on a 10% discount to the firm’s RNAV (S\$4.78 per share). CLI’s asset-light fund management model, significant recurring income, and commitment to capital recycling underpin the investment thesis. Key re-rating catalysts include:
- Accelerated growth in FUM to drive fee income and ROE
- Faster-than-expected balance sheet reduction to boost returns
Potential risks include a weaker real estate outlook that could slow capital recycling, and a prolonged high interest rate environment that may compress investment returns.
CLI Financial Summary (S\$ million)
| Year |
2023A |
2024A |
2025F |
2026F |
2027F |
| Total Net Revenues |
2,784 |
2,815 |
2,169 |
2,186 |
2,202 |
| Operating EBITDA |
953.0 |
897.0 |
825.5 |
882.0 |
938.8 |
| Net Profit |
181.0 |
479.0 |
819.2 |
877.3 |
922.5 |
| Normalised EPS (S\$) |
0.07 |
0.13 |
0.16 |
0.18 |
0.18 |
| Dividend (S\$) |
0.12 |
0.12 |
0.12 |
0.12 |
0.12 |
| Dividend Yield (%) |
4.36 |
4.36 |
4.36 |
4.36 |
4.36 |
| Net Gearing (%) |
55.5 |
38.8 |
42.4 |
44.2 |
45.3 |
| P/BV (x) |
0.98 |
1.01 |
0.96 |
0.90 |
0.85 |
| ROE (%) |
2.44 |
4.52 |
5.88 |
5.95 |
5.90 |
Peer Comparison: Singapore Developers
| Company |
Ticker |
Reco. |
Price (S\$) |
Target (S\$) |
Market Cap (US\$m) |
Core P/E FY24A |
Core P/E FY25F |
P/BV FY25F |
Dividend Yield FY25F |
RNAV (S\$) |
P/Disc. to RNAV |
| APAC Realty Ltd |
APAC SP |
Add |
0.41 |
0.45 |
113 |
15.4 |
12.5 |
0.87 |
6.1% |
n.a. |
n.a. |
| Capitaland Investment |
CLI SP |
Add |
2.75 |
4.30 |
10,495 |
28.9 |
16.8 |
0.96 |
4.4% |
4.78 |
-42% |
| City Developments |
CIT SP |
Add |
4.97 |
8.97 |
3,398 |
63.4 |
18.6 |
0.47 |
2.4% |
16.32 |
-70% |
| Frasers Property Limited |
FPL SP |
Add |
0.82 |
1.41 |
2,448 |
9.2 |
16.2 |
0.31 |
5.5% |
2.57 |
-68% |
| Hongkong Land Holdings Ltd |
HKL SP |
Hold |
4.89 |
4.91 |
10,783 |
26.3 |
16.0 |
0.35 |
4.9% |
na |
na |
| Propnex Ltd |
PROP SP |
Add |
1.05 |
1.25 |
595 |
19.0 |
12.4 |
6.03 |
7.7% |
n.a. |
n.a. |
| UOL Group |
UOL SP |
Add |
5.77 |
8.20 |
3,730 |
17.0 |
14.5 |
0.42 |
3.1% |
13.66 |
-58% |
RNAV Breakdown: Investment Properties and Fund Management Business
CLI’s RNAV stands at S\$23,832.2 million, equating to S\$4.78 per share. Major investment property and lodging asset exposures include:
- Singapore: S\$287.0m
- China: S\$2,325.2m
- Malaysia: S\$407.1m
- Lodging: S\$1,525.5m
- Stakes in listed REITs: S\$8,032.4m
- Stakes in unlisted funds: S\$4,098.1m
- Value of fund management business: S\$6,873.9m
ESG Commitment: Sustainability at the Core
CLI scored B+ overall in LSEG’s 2023 ESG rankings, with Environmental at B-, Social at B+, and Governance at A. Notable highlights:
- Adoption of Capitaland Group’s 2030 Sustainability Master Plan, targeting net zero carbon by 2050 and a 46% reduction in Scope 1 and 2 emissions by 2030.
- Targeting 100% green-rated properties by 2030; currently, 58% of the portfolio has green certification.
- Secured S\$16.1 billion in sustainable finance between 2018-2023.
- Social targets include at least 40% female senior management representation and a strong focus on employee wellness and governance.
- Scores high for management (A+), product responsibility (A-), workforce (A-), and CSR strategies (A+).
Areas for improvement include environmental innovation and community engagement, but ongoing initiatives are expected to enhance rankings further.
Financials: By the Numbers
- Operating EBITDA margin is projected to rise from 34.2% (2023A) to 42.6% (2027F).
- ROIC is forecast to grow from 35.6% (2023A) to 36.5% (2027F).
- Net cash per share is projected to decline, reflecting ongoing capital deployment and asset recycling.
- CLI maintains a stable dividend payout ratio, with a forecasted 4.36% yield through 2027.
Conclusion: CLI Positioned for Resilient, Sustainable Growth
CLI’s results and outlook underscore its transition to a fee-driven, asset-light business model, supported by prudent financial management, strong recurring income, and a commitment to sustainable growth. The company’s clear strategic direction, robust balance sheet, and ongoing capital recycling initiatives make it a compelling choice for investors seeking both stability and upside in Singapore’s real estate sector.
With a significant discount to RNAV and strong ESG credentials, CLI stands out as a top pick among Singapore-listed property developers. The Add rating and S$4.30 target price reflect a high conviction in the group’s ability to deliver sustainable returns and navigate evolving market conditions with agility.
