What do we think of the news?
Following the divestment, we expect FY17e and FY18e DPU to fall 3.9% and 7.2% y-o-y. The potential re-deployment of capital into funding growth opportunities such as the GSCP redevelopment would provide a boost in earnings post completion as evidenced by the previous successful capital recycling efforts seen in 2010 and 2011. In view of this, we revise our terminal growth upwards to 1.85% from 1.3%. We maintain our “NEUTRAL” call on CCT with an unchanged DDM-derived target price of S$1.63
Figures 1 and 2: CCT trades at close to post GFC average dividend yields but above average Price/NAV
Figure 3: Peer comparison table