With its property development arm now privatised, CapitaLand is seeking new grounds with a sharpened focus on investment management. Here’s what investors should know about the move.
In March this year, CapitaLand, known for putting a shopping mall in every possible neighbourhood estate (and somehow managing to make it all work without everything devolving into a Hunger Games-style fight for shoppers), announced it was undergoing a split.
The move would see its property development business split off and taken private, with the remainder of CapitaLand turning its attention to real estate investment management.
Re-named CapitaLand Investment Management (CLIM), the entity is the world’s third largest real estate investment management company. It retains its stakes in CapitaLand’s REITs (real estate investment trusts) and hospitality holdings.
What does this bode for the blue-chip company (and arguably one of Singapore’s finest), and what benefits—if any—can retail investors look forward to?
Here’s what we’ll learn in today’s post:
CapitaLand share prices in the past five years
With CapitaLand’s heavy exposure to the retail, F&B and hospitality sector, it was not spared the negative impact of the COVID-19 pandemic. Indeed, the company saw share price dip to a low of S$2.51 in November 2020.
However, it has since mounted a convincing comeback, with share prices climbing to match previous highs. At the time of writing, CapitaLand share prices are up by 20% compared to five years ago.
This is despite the pandemic’s continued rampage around the world, and an uptick in local cases causing temporary tightening of social distancing rules from 16 May to 20 Jun in 2021.
Amid such tumultuous conditions, the surge in share price could be an indicator of market confidence in CapitaLand’s decision to split its property development arm into a private enterprise, leaving a more strongly investment-focused entity to generate value on the mainboard.
How much dividends will I receive?
Gross dividends (cents per share)
Dividends-wise, C31 has been nothing if not consistent. In the past five years, we’ve seen gross dividends hovering between 9 and 12 cents per share, with a five-year average yield rate of 2.94%—an expected showing, considering CapitaLand’s status as one of Singapore’s foremost blue-chip stocks.
CapitaLand dividends payout schedule
Dividends pay date
In the past five years, CapitaLand has paid out dividends annually. This usually took place in May, after the consolidation of results upon the ending of the financial year in March.
So if you’re invested in CapitaLand, you should mark your calendars for a payday in mid-May.
What risks do I face?
If current sentiments are anything to go by, CapitaLand remains a safe bet for investors—some analysts are expecting a 10% upside in the next 12 months, which would bring the share price past the S$4 mark.
Besides its re-focusing towards a more asset-light and capital-efficient status, this positive outlook is anchored on CapitaLand’s recently announced acquisition of a hyperscale data centre campus in Shanghai, which serves two of China’s largest telecommunications providers.
By moving into new economy assets such as data centres, CapitaLand is making bets on increasing global connectivity and demand for data.
This is an astute move, given how the COVID-19 pandemic has sharpened demand for digital connectivity—and if CapitaLand is successful here, shareholders will stand to benefit from increased upsides.
What does the future hold for CapitaLand?
Whether we like it or not, COVID-19 has caused some long-lasting, even permanent, changes in the way we live, work and play.
For now, sentiment remains upbeat in the office and hospitality sectors, as it is believed that workers will once again return to the office, and travellers will start to fly again.
However, brick-and-mortar retail could be shaky. Challenged by e-commerce and next-day delivery, shopping malls have been struggling even before the pandemic. And with thousands of SMEs in F&B and retail forced to shutter in the past two years, mall operators could be in for a shockwave of unpaid rents and unfulfilled leases.
This could create downward pressure on REITs, which make up a major portion of CapitaLand’s holdings. However, if there’s anyone who can ride out the wave, it’s CapitaLand.
After all, this is the company that cut its teeth on Singapore’s frothy real estate sector, even managing to tame (some say to its detriment) the island’s unruly shopping mall segment.
And with a renewed focus on investment management—free of the distractions of capital-intensive real estate development—and the foresight to develop stakes in new markets like data centres, CapitaLand should safely remain on the blue-chip list for many years to come.
Read these next:
Guide To Property Investment In Singapore
Guide To Real Estate Investment Trusts (REITs), And Whether You’re Ready For It
How To Actually Start Investing In Stocks: A Step-By-Step Guide
What Are Fixed Income Investments, And How They Fit Into Your Portfolio
Best ETFs In Singapore For Tracking Stocks, Bonds And REITs
By Alevin Chan
An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.
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