It hasn’t been long since CapitaLand Investment Limited (SGX: 9CI), or CLI, started trading on Singapore’s exchange.
Five months ago, CLI was spun out of property giant CapitaLand Limited and separately listed while its development arm, CapitaLand Development, was privatised.
Just last week, the newly-listed unit posted its first-ever fiscal 2021 (FY2021) full-year earnings.
It was a sparkling earnings report that showcased CLI’s new focus and its targets for growing the group.
Here are seven highlights from the property investment giant’s first earnings report card.
1. A reversal of fortunes
For FY2021, CapitaLand Investment reported a 15.6% year on year increase in revenue to S$2.29 billion.
Operating profit came in at S$1.1 billion, reversing the operating loss of S$157 million incurred last year.
Net profit clocked in at S$1.35 billion in FY2021, a sharp reversal compared to the net loss of S$559 million in FY2020.
If portfolio gains along with revaluation gains and impairments are excluded, then CLI reported a core net profit of S$497 million, 12.2% higher than the S$443 million in FY2020.
For context, portfolio gains from divestments totalled S$616 million in FY2021 while revaluation gains and impairments came up to S$236 million.
2. Growth in fee-income related business
CapitaLand Investment’s business comprises two main segments — fee income-related business (FRB), and fee-related earnings (FRE) from its funds under management (FUM) business.
FY2021 saw broad-based growth in its FRB business.
FRB revenue climbed by 15% year on year to S$905 million, led by a 33% year on year increase in fee income from CLI’s stable of REITs.
Private equity funds under management saw revenue jumping by 36% year on year to S$114 million while lodging management’s revenue increased by 27% year on year.
Property management, however, witnessed a slight 7% year on year dip in revenue to S$306 million.
3. Active capital recycling
Management has been active in recycling capital during FY2021, with a total of S$13.6 billion worth of assets divested during the year.
Around 82% of this amount was converted into or retained as FUM, which helped to generate recurring FRE for the group.
CapitaLand Investment invested a total of S$6.8 billion for FY2021, with the bulk (68%) going into REITs and the remainder going into funds (18%) and real estate investment business (14%).
In total, the group executed 43 transactions involving investments and divestments totalling S$20.4 billion.
Of note, slightly more than half of the total investments made were in new economy assets.
4. Robust credit profile
The group maintained a healthy debt profile with net debt to equity of just 0.48 times for FY2021.
The interest coverage ratio stood at 6.3 times and its average debt maturity was 2.8 years.
The cost of debt was low at 2.7% with 63% of CLI’s total debt at fixed rates, mitigating the risk of rising interest rates.
The property investment giant can tap on another S$7 billion from its various treasury sources if needed.
5. Improvement in capital efficiency
Moving on to its FRE, CapitaLand Investment saw a 34% year on year increase in FRE to S$409 million.
More than half of this FRE was contributed by listed funds, with the rest coming from private funds.
FUM also grew by 10% year on year from S$78 billion to S$86 billion and contributed to the increase in FRE.
Capital efficiency has improved for the group as FRE as a proportion of FUM increased to 0.5% from 0.4% in FY2020.
6. Recovery in the lodging business
CapitaLand Investment’s lodging business reported strong growth despite the ongoing pandemic.
Lodging units under management increased by 8% year on year to 133,000 units, on track to meet the group’s 2023 target of 160,000 units.
Around 3,000 new units were secured in Vietnam in FY2021, and the division also expanded its geographical reach to new cities in Africa, Indonesia, China, and Vietnam.
Revenue per available unit (RevPAU) also climbed by 19% year on year to S$70 as better economic conditions arose as countries slowly reopened.
The overall occupancy rate for CLI’s lodging portfolio increased to 60% from 50% a year ago.
7. CapitaLand Investment declared final and special dividends
In line with the improved performance, CLI declared an ordinary dividend of S$0.12 and a special dividend of S$0.03.
Total FY2021 dividends came up to S$0.15 per share, 67% higher than the prior year’s S$0.09 declared by CapitaLand Limited.
At CLI’s last traded price of S$3.72, its shares were offering a trailing dividend yield of 4%.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
