2HFY2024 distributable income of $385.7 million, up 6.4% y-o-y, included maiden contributions from its 50% stake in ION Orchard. However, 2HFY2024 distribution per unit (DPU) of 5.45 cents was stable y-o-y, owing to a larger unitholder base following CICT’s equity fundraising in September 2024.
CICT’s portfolio valuation rose 6.2% y-o-y to $26 billion in its end-FY2024 valuation exercise, lifted by the ION Orchard acquisition and valuation upside from the Singapore and Germany portfolios, but slightly offset by declines in Australia.
Aggregate leverage dipped to 38.5% from 39.4% at end 3QFY2024 as divestment proceeds were utilised to pare down debt.
OCBC trims target price
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On the other hand, OCBC Investment Research is staying “buy” on CICT but with a lower target price of $2.35, down from $2.41 previously.
CICT’s average cost of debt stayed flat q-o-q at 3.6% but management expects this to trend up in FY2025 though likely to be below 4%.
After adjustments, OCBC has trimmed their FY2025 DPU forecast by 0.8% due in part to a lower assumed proportion of management fees taken in units. “We also increase our risk -free rate assumption by 50 basis points to 2.75% and after rolling forward our dividend discount model valuation, our fair value estimate slips.”
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Morningstar maintains $2.32 fair value estimate
Morningstar Equity Research analyst Xavier Lee says CICT’s 2HFY2024 results were “in line” with expectations, keeping CICT at four stars against his house’s five-tier rating.
“Given no surprises, we retain our fair value estimate of $2.32 per unit after rolling our model and finetuning our assumptions. Based on current prices, the trust is undervalued and trades at an attractive 2025 dividend yield of 5.7%,” he adds.
Lee likes CICT’s portfolio of “high-quality office and retail assets” and expects the completion of asset enhancement works at IMM Building and Galileo — located in Frankfurt — to drive near-term growth.
FY2024 ahead of DBS’s expectations
Finally, CICT’s FY2024 results came in above DBS Group Research’s expectations. In a Feb 6 note, DBS analysts Geraldine Wong and Derek Tan are maintaining “buy” on CICT with an unchanged $2.30 target price.
CICT’s higher DPU was “a positive surprise”, say the DBS analysts, considering the enlarged unit base following the equity fundraising exercise for the ION Orchard acquisition.
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“Management intends to maintain the 50/50 management fee structure (in contrast to the potential increase to approximately 70% mentioned in the ION Orchard announcement), which reinforces our view that DPU growth is operationally driven and sustainable,” they write.
ION Orchard itself performed ahead of expectations, with a 2 percentage point increase in occupancy to 98% since the deal was announced in September 2024.
CICT boasts “attractive” forward FY2025 yields of 5.6%, they add.
Wong and Tan say they like CICT — “a leader in the S-REIT space” — as a proxy to Singapore’s “more resilient and stable economy”.
Units in CICT closed 1 cent higher, or 0.51% up, at $1.98.
