CapitaLand Retail China Trust's (CRCT) results were within expectation. 4Q17 revenue fell 4.6% YoY to S$54.1m while NPI fell 5.2% to S$33.0m, mainly due to the absence of contribution from CapitaMall Anzhen. For the rest of the portfolio, higher NPI was clocked at all the assets except Grand Canyon and Qibao.

4Q17 DPU ended flat at 2.37 S cents; it includes a partial distribution of the gain from the disposal of Anzhen. FY17 DPU came up to 10.10 S cents or 100% of our full-year forecast. The REIT achieved a positive rental reversion of 4.8% in 4Q17 and 5.6% in FY17, while portfolio occupancy came to 95.4% as at end-2017.

Going forward, management expects Rock Square in Guangzhou to be a significant driver of DPU growth. Investors should also focus on the uplift at CapitaMall Wangjing from the conversion of anchor space into specialty stores.

Pending further details, we keep our HOLD rating but place our fair value of S$1.63 under review.

Source: OCBC Research - 31 Jan 2018