CapitaLand’s 2020 Q1 Update – What’s the Real Deal?
CapitaLand Limited (SGX: C31) rolled out a mixed bag of results for the first quarter of 2020. The group’s portfolio spans commercial, retail, hotels, and business parks – basically every real‑estate flavour you can imagine.
Big Numbers, Small Impact?
- Assets at $82.3 billion – nothing small here.
- Out of that, 43 % sits in Singapore and China (with 37 % in China alone)
Three Take‑away Truths from the Update
- Pandemic‑hit areas differ for each property type – hotel revenue took a nosedive while office lease numbers stayed comparatively steady.
- Geography matters – Singapore’s resilient economy outpaced China’s slower recovery.
- Future outlook is cautiously optimistic – with strategic renovations and new mixed‑use projects, CapitaLand is aiming to shake off the pandemic blues.
In short, the conglomerate is juggling the fairy‑tale of a diversified portfolio with the everyday reality of a global slowdown. One thing’s clear, though: they’re all set to keep building (pun intended) through the post‑pandemic world.
1. Retail performance negatively impacted
CapitaLand Retail: The Lockdown Roller Coaster
Singapore’s Squeaky Shoes, Malmö’s Mile-Long Wait
When the government slapped the “stay‑home” crown on everyone, retail malls turned into almost‑empty ghost towns. Singapore’s footfall slid 10.8% year‑on‑year, while Malaysia saw a whopping 20.9% plunge. Shoppers were either stuck at home or stuck inside supermarkets that were the only ones running.
China: The Ghost Mall Parade
February felt like a blink where every mall in all 15 Chinese locations vanished from the map. Liberation came on April 19 when 85% of tenants returned, but the emptiness lingers. Sales are still playing hide‑and‑seek with pre‑COVID figures. The numbers are brutal: footfall dropped 52% since last year, prompting CapitaLand to cut rents – 100% relief for Wuhan tenants and 50% for the rest.
Japan: The Jolly Retail Jamboree
Unlike the rest, Japanese malls stayed open like a party that never needed a pause. They figured if you can go, go ahead! They’re the oddball that kept the lights on and the crowds (though smaller than usual).
What the Future Looks Like
- Singapore will probably keep nursing low numbers into Q2 because the new circuit breaker, launched on April 7, keeps people inside more than outside.
- Malaysia will stay in a bit of a slump until tourists start popping back and malls find crazy ways to attract shoppers.
- China is hoping the foot traffic rebounds once the economy kicks the dance‑floor back into motion.
- Japan has the edge as a “stay‑open” zone; it might boost the regional market, but the dream to hit pre‑pandemic sales is no walk in the park.
Bottom line: CapitaLand’s mall hubs feel the sting of lockdowns how a kid feels when the ice cream truck stops. Sleep tight, shoppers, and keep hunting for those viral “best‑price” deals—just don’t forget the memes about staying inside.
2. Hotels and lodging adversely affected
CapitaLand’s Global Lodging Roll‑Call
- About 730 properties spread across Singapore, Australia, China, Europe and India.
- By the end of Q1 2020, 30 of these were shut down because of the pandemic.
- Fee income from the group’s serviced residences and hotels fell by 9% year‑on‑year.
Revenue Per Available Unit (RevPAU) Sags
- First‑quarter RevPAU slashed by 22% (from $108 down to $84). The impact on overall RevPAU remains unclear.
- China takes the biggest hit, with a 29% plunge.
- Gulf Region and India pull slightly ahead, each up by 4%.
April Hits Worse Than March
- By the end of April, 52 properties were closed – a jump of 22 from March’s count.
- More closures mean lower occupancy and a steeper dip in RevPAU.
- Both fee income for operating properties and rental income for owned ones feel the squeeze.
Silver Linings in the Making
- Long‑stay properties keep guests for longer periods, so they usually enjoy higher occupancy.
- Domestic travel in China is picking up, and that should gradually lift occupancy levels.
Bottom line? It’s a rough ride for hospitality, but with a few brighter spots on the horizon, the sector could see a glimmer of hope next quarter.
3. Fund management continues to shine
CapitaLand Fund Management Still Rocking, Even Amid a Global Crisis
What’s the Latest?
- AUM for the group’s 7 REITs, business trusts, and 25 private‑equity funds surged to $74.8 bn as of March 31, 2020.
- Fee income leapt a stunning 54.2 % YoY, reaching $76.5 mn—mostly thanks to the bulk boost from Ascendas‑Singbridge.
- A solid 74 % of fee income came from REITs and business trusts; the balance flowed from PE funds.
Looking Ahead
The division’s got its sights set on reaching $100 bn in AUM by 2023—talk about a bold leap!
Takeaway Moment
While the rest of the market was swaying in a limbo, CapitaLand’s fund management division was steady on the ground, stacking billions and proving that even in a crisis, the cash flow can stay rocket‑powered.
Get Smart: Diversity in property portfolio is a boon
CapitaLand Triumphs in a Sudden Surge of Sunshine
Despite the world throwing a curveball that would have rattled many investors, CapitaLand got ahead of the game in Q1 2020, posting a surprisingly solid shot‑gun performance.
Why It Worked
- Property Mix Magic: The mix of business parks, logistics hubs, and office spaces gave the company a vein of resilience that COVID-19 couldn’t touch.
- Financial Health: Net debt sits comfortably at 0.34 versus total assets and an interest coverage ratio of 7.0. That’s a no‑nonsense way of saying “we’re cushioned.”
- Shareholder Sweetness: Net asset value per share leapt from $4.64 at the close of 2019 to $4.74 by end of March 2020.
Keeping a Cool Head During Wartime
With liquidity sitting solid and a buffer in place, the group is ready to date their way through the pandemic’s dip. Nothing short of a full‑scale pandemic seemed to hit the company’s core business.
Eyes on Q2: The Telltale Quarter
While Q1 felt like a warm breeze, Q2 might bring a sharper chill. Investors and market watchers will keep a tight eye on any emerging negative beats and how the group handled this hotter wave.
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Author’s Note
This piece comes straight from The Smart Investor. All content serves purely informational purposes and doesn’t replace professional financial counsel. Royston Yang is just a behind-the-scenes voice; he doesn’t hold stocks in any of these companies.
