CGS International Securities
August 14, 2025

Capitaland Investment: Navigating Growth and Sustainability Amid Market Headwinds

1H25 Performance: Fee Income Resilience, Asset-Light Strategy and Growth Focus

Capitaland Investment (CLI) delivered a mixed set of 1H25 results, underscoring both the resilience and challenges inherent in its asset-light fund management model. The company reported 1H25 EPS of 5.8 Singapore cents, falling short of expectations at 35.3% of the full-year forecast. Revenue declined 24% year-on-year to S$1.04 billion, primarily due to the deconsolidation of Capitaland Ascott Trust (CLAS). Excluding this, topline growth would have stood at a healthy 7% year-on-year.
PATMI (Profit after Tax and Minority Interest) came in at S$287 million, down 13% year-on-year, impacted by income gaps from divested assets, weaker fund performance, lower transaction fees, and the absence of a one-off tax writeback seen in the prior year. CLI closed 1H25 with a net debt-to-equity ratio of 0.46x, maintaining balance sheet discipline while reiterating its ambitious growth strategy.
Key strategic priorities include a continued focus on thematic investment products, a proposed C-REIT listing by 4Q25, persistent fundraising efforts, and expanding capital sources. Strategic partnerships with SC Capital Partners (SCCP) and Wingate are expected to accelerate fund management growth and portfolio efficiency.

Fee Income-Related Business: Steady Growth in 1H25

CLI’s Fee Income-Related Business (FRB) demonstrated resilience:

• FRB revenue rose modestly by 0.5% year-on-year to S\$564 million in 1H25.
• Growth drivers: Listed funds management (+3.4%), lodging management (+3.6%), and commercial management (+1%).
• Offset by: Lower private funds management fees.
• Fund fees averaged 45 basis points.
• Funds under management (FUM) reached S\$117 billion at end-1H25.
• CLI deployed S\$3.2 billion of capital via private funds and REITs and raised S\$2.6 billion in total equity year-to-date.
• Expectations for 2H25: Increased capital recycling activities and full six-month contributions from SCCP and Wingate stakes.

CLI remains committed to its S$200 billion FUM target by 2028, aiming for S$500 million annual revenue from its lodging management business over the same period.

Real Estate Investment Business: Impact of Asset Divestments

Excluding CLAS, CLI’s Real Estate Investment Business (REIB) revenue dipped 5% year-on-year in 1H25, reflecting ongoing divestments in the US and China. However, there were pockets of strength:

• Positive rental reversions in Southeast Asia, India, and other selected markets.
• China continued to face negative rental reversions across asset classes.
• 2H25 focus: Reducing balance sheet investments, including through CLI RMB Master Fund and the planned C-REIT listing.
• On-balance sheet assets as at end-1H25 stood at S\$4.3 billion, largely concentrated in China, with the remainder spread across Europe, the US, and Southeast Asia.

Investment Case: Strong Recurring Income Base and Asset-Light Model

CGS International reiterates an “Add” rating on CLI, maintaining a target price of S$4.30 based on a 10% discount to RNAV. The investment case centers on CLI’s strong recurring fee-income base, which delivers reliable income visibility, and its asset-light fund management approach.
Key catalysts for re-rating include:

• Accelerated growth in FUM, boosting fee income and ROE.
• Faster reduction of balance sheet investments, potentially lifting ROE.

Risks to watch:

• Weaker real estate outlook, slowing capital recycling.
• Prolonged high interest rates, eroding investment returns.

Financial Performance Overview: Key Figures and Trends

Peer Comparison: Singapore Property Developers

CLI’s valuation and performance are contextualized against its key Singapore developer peers:

CLI trades at a significant discount to its RNAV, reflecting market caution but also offering potential for re-rating should its fund management growth and asset recycling strategies deliver.

ESG Leadership: Sustainability as a Differentiator

CLI continues to be recognized for its robust ESG performance:

• Overall ESG score: B+
• Environmental: B-
• Social: B+
• Governance: A
• ESG Controversies: A+

The company has adopted the Capitaland Group’s 2030 Sustainability Master Plan, targeting:

• Net Zero carbon emissions by 2050
• 46% reduction in Scopes 1 and 2 GHG emissions by 2030
• 72% reduction in carbon emissions intensity
• 15% reduction in energy consumption intensity (vs 2019 baseline)
• 45% renewable energy usage by 2030
• 20% reduction in waste intensity
• At least 40% female representation in senior management
• 100% of properties green-rated by 2030

In 2024, CLI achieved:

• Raised S\$4.3bn in sustainable finance
• 11% reduction in energy consumption intensity
• 13.1% reduction in Scope 1 and 2 carbon emissions intensity
• 20.5% reduction in water consumption intensity
• 46.3% reduction in waste intensity
• 63% of its global portfolio with at least one green building certification
• 51% of properties certified LEED GOLD or equivalent
• 86% staff trained in Fraud, Bribery and Corruption Awareness
• 73% staff trained in cybersecurity

CLI ranks 29th out of 102 Singapore companies and 4th among its real estate peers for sustainability efforts. These initiatives, while not currently reflected as a valuation premium, are expected to drive operational efficiency and appeal to ESG-focused investors.

Balance Sheet and Key Ratios: Stability and Growth Prospects

CLI’s financial stability is underpinned by a robust balance sheet:

• Total Cash and Equivalents (Dec-25F): S\$1,903 million
• Total Investments (Dec-25F): S\$20,382 million
• Total Debt (Dec-25F): S\$8,401 million
• Shareholders’ Equity (Dec-25F): S\$14,316 million
• Minority Interests (Dec-25F): S\$994 million
• Total Equity (Dec-25F): S\$15,310 million

Key ratios for FY25F:

• Revenue Growth: -22.9%
• Operating EBITDA Margin: 38.1%
• Net Cash per Share: -S\$1.30
• Gross Interest Cover: 1.73
• ROIC: 31.5%
• Return on Average Assets: 5.01%
• Accounts Receivable Days: 179.1
• Accounts Payable Days: 334.5

Looking Ahead: Strategic Growth, Sustainability, and Investor Value

CLI remains firmly on its growth trajectory, anchored by its asset-light model and fee income business, strategic partnerships, and strong focus on sustainability. Despite short-term headwinds from asset divestments and interest rate challenges, the company’s long-term prospects are buoyed by its S$200 billion FUM target, sector-leading ESG initiatives, and disciplined capital management.
For investors seeking exposure to a forward-looking, resilient Singapore property developer with a differentiated fund management approach and sustainability credentials, CLI stands out as a compelling choice. With a significant RNAV discount and clear growth catalysts on the horizon, the stock offers both value and upside potential.

Stock Ratings and Investment Framework

• Add: Total expected return exceeds 10% over the next 12 months.
• Hold: Total expected return is between 0% and 10%.
• Reduce: Total expected return is below 0%.

CLI is currently rated “Add” with a target price of S$4.30, reflecting an attractive 58.1% upside from its current price.

Conclusion

Capitaland Investment is navigating market complexities with strategic clarity, focusing on asset-light growth, recurring income, and ESG leadership. As it executes on its fund management ambitions and sustainability roadmap, the company is well-positioned to deliver value to shareholders and set benchmarks for the industry.
Investors and analysts should closely monitor CLI’s progress on FUM growth, asset recycling, and ESG execution as key indicators of future performance and potential re-rating.