The figure stood below analysts’ expectations, including Maybank Securities’ Krishna Guha, who noted that it was a “weak finish” to the year for CLI. CLI’s full-year earnings stood at 77% of Guha’s estimates.
“Excluding the valuation impact, operating patmi for FY2023 was down 7% while cash patmi, which includes divestment gains, fell 6%. CLI set a new fund assets under management (AUM) target of $200 billion in the next five years,” notes Guha.
In his Feb 29 report, Guha has kept his “buy” call on CLI with a lower target price of $3.15 from $3.30 previously.
He has also lowered his FY2024 patmi forecast by 16% after factoring in higher borrowing costs and lower valuation gains.
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“Our sum-of-the-parts (SOTP)-based target price is lower by 5% to $3.15 due to discounts applied to balance-sheet assets, partly offset by higher value for the fund management business,” he writes.
“While headwinds persist and near-term catalysts are lacking, current valuation makes risk-reward favourable,” he adds.
DBS Group Research analyst Derek Tan has also kept his “buy” call on CLI as the group’s operating patmi of $568 million, though 6.7% lower than its previous year’s operating patmi, still stood slightly ahead of his estimates.
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“Overall numbers, while lower y-o-y, came in better than expected in our view, given the stock has been under pressure since the start of 2024, on the back of worries of erosion of net asset value (NAV) and profits given expected revaluation losses,” says Tan in his Feb 29 report.
Another plus is the group’s achieving $100 billion in FUM mainly from its private funds division after a “quiet FY2023”, says Tan.
With the group aiming to add another $100 billion to its FUM within five years, the analyst sees inorganic growth being one of the key strategies to achieve that target.
Despite the positives, Tan has lowered his SOTP target price to $3.85 from $4.25.
As at his report, CLI was trading at $2.78 or at 1.0 times its P/B after an 8% decline in NAV to $2.75 per share.
That said, Tan remains upbeat on CLI’s future, seeing its private funds and REITs complementing each other in terms of its acquisition strategy across business cycles.
“With diverse real estate strategies ranging from opportunistic, value-add to core investment, we see CLI leveraging on opportunities in market upcycles and downcycles as its REITs and private funds can be active through those real estate cycles, ensuring consistent and visible growth profiles,” says the analyst.
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The research team at OCBC Investment Research (OIR) has also kept its “buy” call even though CLI’s operating patmi missed its estimates by 27%.
That said, CLI has emerged as a “more nimble and resilient entity” after its strategic restructuring. To this end, the OIR team believes that CLI would operate with a more asset-light business model with a strong focus on recurring income streams.
However, after factoring CLI’s FY2023 results and adjusting its assumptions, the OIR team has cut its FY2024 operating patmi forecast by 21%. It has also trimmed its fair value estimate to $3.89 from $4.02 previously.
As at 1.28pm, shares in CLI are trading flat at $2.71.
