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What Investors Should Know About CapitaLand Retail China Trust’s Latest Earnings and Valuation

CapitaLand Retail China Trust (SGX: AU8U) is a real estate investment trust that invests mainly in retail malls in China.

Its portfolio currently consists of 11 malls that are located in six of China’s cities, which includes Beijing, Chengdu, Shanghai, and more. There are two things about CapitaLand Retail China Trust that investors may want to know about right now: Its latest financial performance and valuation.

Financial performance

Here’s a table showing important items from the REIT’s income statement for the second quarters of 2017 and 2016:


Source: CapitaLand Retail China Trust 2017 second quarter earnings presentation

We can see that the REIT delivered growth in the second quarter of 2017 as its net property income and distributable income increased by 16.3% and 4.3%, respectively, compared to a year ago.

The improvement in net property income was driven by contributions from CapitaMall Xinnan which was acquired on September 2016.

CapitaLand Retail China Trust also achieved an occupancy rate of 96.2% for the reporting quarter, which is higher than a year ago (94.9%).

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows CapitaLand Retail China Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 39 REITs that are in Singapore’s stock market.


Source: SGX Sock Facts; data as of 15 October 2017

We can see that CapitaLand Retail China Trust is trading at a slight premium to the market average given its higher PB ratio and lower distribution yield.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.