CapitaLand Integrated Commercial Trust: Business Update in Line; Sydney Office Remains Challenging

We retained our fair value estimate of SGD 2.32 per unit for CapitaLand Integrated Commercial Trust, or CICT, after the in-line third-quarter 2023 business update. The trust's cumulative nine months' revenue and net property income grew 9.8% and 6.8% year on year, respectively, to SGD 1,166 million and SGD 827 million. This made up 75% and 74% of our full-year estimates, respectively. The slight miss on net property income is due to cost inflation pressure on its operating expense, and management expects net property income margin to improve as it focuses on cost management in the coming months. Following the recent selloff of CICT's units, we think the trust is currently undervalued and trades at an attractive 2024 dividend yield of 6.5%.