It’s always interesting when companies lay out their long-term plans for investors to scrutinise.
Such plans are usually detailed during Investor Day events as management lays out their strategies, goals and targets.
Blue-chip companies are usually the ones releasing Investor Day material for investors to carefully scrutinise.
Keppel Ltd (SGX: BN4) started the ball rolling with plans to grow its Funds Under Management (FUM) during last year’s Investor Day.
Next up was Seatrium (SGX: 5E2) which released its Investor Day plans back in March this year.
Singtel (SGX: Z74) followed suit in August with a set of Investor Day slides detailing its transformation plan called ST28.
CapitaLand Investment Limited (SGX: 9CI), or CLI, is the next in line to announce its Investor Day plans.
Here are five key highlights from the real estate investment manager’s (REIM) Investor Day slides.
Strong progress made since listing
Since CLI was listed back in September 2021, the REIM has made significant progress.
A total of S$17 billion of capital was raised, split between listed funds (S$8 billion) and private funds (S$9 billion).
S$24 billion of capital was recycled across the group since 2021, with nearly half (S$11 billion) coming from China alone.
Around three-quarters of the capital was recycled into funds.
FUM has also grown steadily over the years.
At listing, CLI’s FUM stood at S$87 billion, made up of S$55 billion of listed funds and S$32 billion of private funds.
This FUM has grown by around 30% to the current S$113 billion, with S$15 billion added via portfolio acquisitions and S$11 billion via mergers and acquisitions.
Fee-related earnings, however, showed a smaller increase of just 7% from S$292 million at listing to the current S$313 million for the first nine months of 2024 (9M 2024).
CLI’s Lodging Management division made significant progress with more than 34,300 units opened since listing.
Revenue per available unit (RevPAU) shot up by 48% since listing, with more than S$150 million of capital committed to asset enhancement initiatives.
To grow its FUM further, management identified three key themes of demographics, disruption, and digitalisation.
Megatrend theme 1: Demographics
The first megatrend, demographics, refers to the global ageing trend and mobility issues that will increase society’s focus on healthspan and age-suitable living.
By 2050, one in six people in the world will be aged 60 and above.
This megatrend will provide opportunities for CLI’s lodging, living, and wellness businesses as the demand for such sectors increases.
As people grow older, there will also be more focus on income-generating REITs and products that can provide a steady source of passive income.
There is also an increasing shift towards experiential lifestyles with more than half of Generation Z travellers prioritising spending on authentic experiences.
This demand should benefit CLI’s lodging platform, The Ascott, as well as its associated brands such as Citadines and lyf.
Megatrend theme 2: Disruption
Disruption refers to geopolitical and macroeconomic uncertainties that lead to re-pricing of capital costs and the shifting of supply chains.
Global supply chains are being re-mapped as countries impose protectionist policies, and the disruption megatrend will create demand for CLI’s logistics and self-storage assets.
The global logistics market is set to grow to US$18.2 trillion by 2030, offering myriad opportunities for CLI’s listed funds to expand further.
Some of these listed funds include CapitaLand Ascendas REIT (SGX: A17U), CapitaLand China Trust (SGX: AU8U), and CapitaLand India Trust (SGX: CY6U).
Megatrend theme 3: Digitalisation
The third megatrend, digitalisation, should be the most obvious to investors, and refers to the global digitalisation shift and widespread adoption of generative AI.
The surge in demand will result in exponential growth in data storage and CLI is well-positioned to expand its data centre platform of 27 data centres.
Global data centre capacity demand is set to grow by 22% per annum from 2023 to 2030, with the colocation market also set to expand from 2022 to 2026.
CLI provides a complete suite of in-house data centre capabilities which should make the group a strong contender to grow its portfolio.
Ambitious goals
CLI’s aim is to increase total shareholder return which will be driven by both dividends and capital gains (i.e. share price increases).
The goal is to increase FUM to S$200 billion by 2028 through both organic and inorganic growth.
CLI has taken the first step to growing its FUM through the acquisition of SC Capital Partners.
Next, the group plans to double its fee-related business operating net profit from S$318 million in 2023 to more than S$650 million by 2028 to 2030.
The growth will be achieved through a combination of steady REIT organic expansion, private funds growth, and an increase in revenue from lodging management.
Finally, the group’s total operating net profit is targeted to more than double to <S$1 billion within the same period, with the fee-related business to contribute roughly 60% to 70% of the total.
Get Smart: A multi-year effort
CLI has set itself ambitious targets to grow its FUM and overall earnings.
These goals will involve a multi-year effort where management has to track its progress through milestones.
Investors should expect regular updates from the REIM on its progress towards achieving these objectives as time goes by.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
