DBS Group Research analysts Rachel Tan, Geraldine Wong and Derek Tan have maintained their “buy” recommendation on CapitaLand Integrated Commercial Trust (CICT) with a raised target price of $2.50 from $2.40 previously as they view the REIT as a serious bargain.
Calling it “big, cheap and fresh”, the combined entity following the merger of CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT), is now trading at attractive valuations of close to 1.0x price/net asset value (P/NAV).
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“With forward yields of around 6%, CICT offers the highest yield among its large cap peers which are trading at around 5% yield,” say the analysts.
Believing FY2021 to be the year of recovery as the world progressively emerges from the Covid-19 pandemic, the analysts are positive that the REIT will ride the cyclical recovery trend.
With the imminent release of the vaccine, the analysts believe that a “V-shaped recovery will be the key catalyst to drive valuations close to its historical average (since it was listed) of 1.24x P/NAV”.
SEE: CapitaLand Mall Trust to start trading as CapitaLand Integrated Commercial Trust on SGX-ST
As the largest S-REIT, the analysts view that CICT will eventually be “too big to ignore”.
“The company’s integrated commercial assets will drive synergistic value from its existing portfolio. In addition, its size offers a bigger platform and opportunity to grow with acquisitions of integrated development led by the rising global trend of live-work-play,” they say.
Units in CICT closed 4 cents higher or 2.0% up at $2.08 on Dec 9.