CapitaLand Retail China Trust’s (CRCT) 3Q16 results were impacted by a stronger SGD against RMB. NPI in RMB terms was 0.6% higher YoY at RMB 161.3m, or 7.4% higher YoY if the change in Beijing’s tax policy was stripped out. Nonetheless, NPI in SGD terms fell 6.9% YoY to S$35.8m.

Distributable income fell a corresponding 7.7% YoY to S$20.6m, with DPU dropping 10.6% YoY to 2.36 S cents. We note that leasing momentum has picked up at Minzhongleyuan, with occupancy increasing to 80.1% from 70.5% as at end 2Q16. Chengdu Galleria is to start contributing to portfolio performance from 1 Oct 2016.

We keep our Buy rating and fair value of S$1.67 under review pending more details.

Source: OCBC Research - 25 Oct 2016

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