CapitaLandInvest (SGX: 9CI) shares are down 3% today on the reconsideration of their 9 month results release before the weekend. Those results were good, in the sense that they’ve not as yet been hit by a major China slowdown. “Singaporean real estate investment manager CapitaLand Investment (CLI) posted a 3 percent year-on-year dip in revenue for the nine months ending in September, with growth in its fee-earning business partially offsetting declining performance in the real estate investment business, according to a company update released on Thursday. CLI, which earns fees from managing listed and private funds as well as from its lodging and commercial property businesses, saw fee revenue jumping 9 percent year-on-year to S$799 million for the period, with the lodging vertical surging 31 percent.”
To give a little more detail about the business itself: “Headquartered and listed in Singapore, CapitaLand Investment Limited (CLI) is a leading global real estate investment manager (REIM) with a strong Asia foothold. As at 30 June 2023, CLI had S$134 billion of real estate assets under management, and S$89 billion of real estate funds under management (FUM) held via six listed real estate investment trusts and business trusts, and more than 30 private vehicles across Asia Pacific, Europe and USA. Its diversified real estate asset classes cover retail, office, lodging, business parks, industrial, logistics and data centres.”
The thing to note is that the capital values belong to the funds, not the company.
CapitaLandInvest share price fom Google Finance
However, obviously enough, everyone is worried about that Mainland China real estate market. With developers (Country Garden, Evergrande, Sunac and so on) going bust left right and centre who wouldn’t be?
But as we say, this is the business that runs the funds, not the funds themselves: “CLI is making encouraging progress in growing its funds under management (FUM). FUM grew by 13.6% from S$88 billion at the end of 2022 to S$100 billion as of 30 September 2023.
Fund management fee-related earnings (FM FRE), however, dipped from S$339 million in 9M 2022 to S$304 million in 9M 2023. The prior year’s FM FRE comprised S$89 million of event-driven, one-off earnings compared with S$32 million in 9M 2023. Adjusting for these items, CLI’s recurring fees increased by 9% year on year to S$272 million for 9M 2023.”
What matters here is the funds under management, not the direct performance of the funds so much. Thus the share price here is obviously going to be influenced by worries about real estate values but not determined by them. 9CI shares depend upon being paid to manage the money that is, not upon real estate itself.