Next on the list of blue-chip stocks to report its earnings is CapitaLand Investment Limited (SGX: 9CI), or CLI.
The property giant saw through a tough year with a mix of bright and weak spots in its financial report.
Headwinds caused by higher interest rates resulted in lower property valuations but CLI also saw higher overall recurring income.
Here are five highlights from the group’s latest earnings that you need to know.
1. Weaker core earnings offset by higher recurring revenue
For 2023, CLI’s revenue dipped by 3.2% year on year to S$2.8 billion.
With the cost of sales rising by 2.3% year on year, gross profit ended up lower by 2.3% year on year at S$1.3 billion.
Operating profit tumbled by 46.5% year on year to S$689 million as other operating expenses jumped nearly 66% year on year.
Net profit was impacted by a S$600 million revaluation loss and plunged by 79% year on year to S$181 million.
Excluding this item and portfolio gains, CLI’s core net profit fell by just 6% year on year to S$781 million.
Despite the slight fall in core net profit, CLI reported higher fee-income-related business revenue for the year.
It also maintained its ordinary dividend of S$0.12 for 2023.
2. FUM growth led by a jump in private fundraising
The group’s deployed and committed funds under management (FUM) stood at S$100 billion as of 27 February 2024.
This amount consists of S$61 billion in listed funds and S$39 billion in private funds.
Close to three-quarters of CLI’s FUM is in China and Southeast Asia with close to half of the FUM parked in retail and new economy assets.
Its listed funds saw active portfolio management with S$1.7 billion of transactions with a total unitholder return above 6% for most funds for 2023.
The total equity raised for listed funds amounted to nearly S$1 billion in 2023, more than fivefold the S$170 million raised a year ago.
Meanwhile, CLI’s private fundraising had a bumper year.
Total equity committed climbed 42% year on year to S$3.5 billion for 2023, with S$2.8 billion of this amount raised from capital partners.
3. Lodging management division reports a record year
Moving on to lodging management, this division achieved a record year as tourists returned with a vengeance as borders reopened fully.
For 2023, fee-related earnings (FRE) for the division jumped 28% year on year to S$331 million.
CLI also ramped up growth across its stable of brands with eight new signings for the lyf brand, the debut of The Crest Collection, and a more than 20% growth in Oakwood’s portfolio since its acquisition.
In total, close to 14,400 units were signed across 77 properties last year with around 9,600 units opened across 53 properties.
Revenue per available unit (RevPAU) also enjoyed a recovery, increasing by 20% year on year to S$91 led by higher occupancy and improved average daily rates.
4. A challenging environment for the real estate investment business
Elsewhere, the real estate investment business (REIB) experienced a weaker year marked by lower profits and declining valuations.
Revenue fell by 9% year on year to S$1.9 billion while operating profit declined by 17% year on year to S$272 million.
The division suffered an overall fair value loss of S$599 million with China registering the bulk of the losses across all asset classes.
The US, UK, and Europe also saw valuation declines but this was offset slightly by an increase in valuations in India and Singapore.
The division’s balance sheet value of effective stakes in assets fell from S$10 billion in 2022 to S$8.6 billion in 2023, with divestments being responsible for part of the decline.
Around S$1.3 billion of divestments were conducted by CLI for the REIB division as part of its capital recycling strategy.
The group’s average divestment premium improved to 16% for 2023, up from 12% a year ago.
Close to 62% of these divestments went into CLI’s listed and private funds to be retained as FUM.
5. Setting new targets
Looking ahead, CLI is targeting divestments, especially in China and the US.
Management has also come up with a new FUM target of S$200 billion in five years.
The property giant will focus on building scale in the lodging, logistics, and self-storage sectors while accelerating growth in its listed funds through acquisitions and active portfolio management.
At the same time, it plans to widen its fund product offerings in Japan, South Korea, and Australia.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
