Monday, February 15, 2016

Journey To Retirement Part 17 -- CapitaR China Trust

Added CapitaR China Trust to the Cashless/Strategic section in my investment portfolio.  This is to replace Cambridge Industrial Trust that was divested last month.

CapitaR China Trust was chosen as it is a retail Reit in China.  Retail Reit to me is termed as defensive (just rank behind health care).  While the like of CapitaMall Trust and Frasers Centrepoint Trust can be considered as a "lifestyle" in Singapore due to their suburban malls exposure, those of CapitaR China Trust might not be (China and Singapore should have different lifestyle).  However, China with a population of over 1 billion (vs 5.3 millions in Singapore) is not something to be easily ignored when come to retail.  This is one of the main reason that I decided to get into this Reit.

According to its latest FY2015 earning report,  it delivered a 10.60 cents DPU for the 2015 and that translates to 7.49% distribution yield (with reference to price of $1.415 just before it went XD).  The higher distribution yield as compared to CapitaMall Trust and Frasers Centerpoint Trust (both below 7%) is due to factoring the risk of having purely overseas assets.  Furthermore, it has a NAV of $1.77, gearing of 27.7% and an overall occupancy rate of 95.1% (for its 10 shopping malls).  In general don't see any weak fundamental at all and definitely better fundamental than Cambridge Industrial Trust.

While those shopping malls by CapitaMall Trust and Frasers Centrepoint Trust I could physically go to each of them to see the shoppers' traffic, quality of the tenants, etc to get a feel of how the business is growing, I could not do the same for CapitaR China Trust since I am not residing in China.  This is the reason why I invest under the Cashless/Strategic section instead of the normal cash investment.  This is to diversify away the "uncontrollable" risk.  The draw back for Cashless/Strategic vs Cash investment is slow in building up the quantity of units.  The method to build up the quantity is similar to the other stocks in the Cashless/Strategic section (FrasersCom Trust, MapletreeCom Trust, Mapletreelog Trust and Kep REIT).

CapitaR China Trust


  1. In long term, China shoppers will buy online.
    Whether China retail reits do well depend on whether they can switch to products and services which are not easy to do online (e.g. restaurants, spectacle shops etc) or combine ecommerce with physical shop (e.g. "shop" unit carrying sample dresses/shoes for ecommerce shoppers to try out before ordering online).

  2. this online shopping thing is not just happened to China alone, Singapore facing the same problem and so as other countries in the world. It is a fundamental shift in the retail sector globally. Shopping malls nowadays are packed with lot of restaurants which cannot be replaced by online. I happened to visit 2 of those CapitaR China Trust malls in Beijing some 3 years ago, trust me, lot of eating outlet like restaurants and fast food joints, cafe, etc. so as a whole i not much concern about e-commerce.