UOB Kay Hian trims its 2023 and 2024 DPU forecast for CICT by 1%

The analyst cited the higher cost of electricity for the revision.

UOB Kay Hian has trimmed its 2023 and 2024 DPU forecast for CapitaLand Integrated Commercial Trust (CICT) by 1% due to the expected higher cost of electricity.

In a report, the analyst said CICT has already experienced a 90% increase in the cost of electricity during 1Q22 and will see another 10% increase in subsequent quarters.

On the brighter side, UOB Kay Hian said CICT will be supported by Singapore's reopening, and the commencement of CICT's asset enhancement initiatives (AEI) for the three floors of retail space at Raffles City Singapore (RCS) previously occupied by Robinsons, set to be completed by Q4 2022. 

"The substantial easing will improve shopper traffic and tenant sales at CICT’s downtown and suburban malls and increase physical occupancy at its office buildings," the analyst said in a report, adding that  CICT’s downtown malls, suburban malls and office buildings would benefit the most from the reopening. 

CICT could also see a boost from conducting AEI for Clarke Quay through the redevelopment of Liang Court, according to the analyst.

"CICT could enhance CQ by changing the trade mix to complement Liang Court. Management could reposition CQ to serve the residential population within the vicinity and introduce more tenants that operate during the day (a departure from the current orientation towards nightlife)," UOB Kay Hian said.

In Q1 2022, negative rent reversion for CICT’s portfolio of retail malls narrowed from -7.3% in 4Q21 to -4.1%. It also achieved positive rent reversion of 9.3% for its office properties, driven by Capital Tower and The Atrium@Orchard, while occupancy improved 1.9ppt QoQ to 92.3%.