To The Moon

Why I'm Buying CapitaLand Investment (9CI.SI): A High-Conviction Bet on Asia's Real Asset Growth

In a volatile global market where asset-light models often chase valuations over value, CapitaLand Investment (SGX: 9CI) stands out as a compelling, resilient, and strategically positioned real asset manager. Here's why I've initiated a position and why I believe it offers both defensive strength and structural upside.

1️⃣ Scalable Asset-Light Model with Recurring Fee Income

CapitaLand Investment (CLI) pivoted decisively from a developer-heavy balance sheet to a capital-efficient, asset-light model. Today, it is one of Asia's largest real estate investment managers, with over S$134 billion in real estate assets under management (AUM).

More importantly, CLI is growing its fee income base, which is less cyclical than development revenue. In FY2024, recurring fund management and lodging management fees contributed over 70% of EBIT — making earnings more predictable and less exposed to property price cycles.

2️⃣ Deep Exposure to Long-Term Growth Markets

CLI's footprint covers key Asian cities like Singapore, China, India, and emerging Southeast Asia — all markets with urbanisation and rising middle-class trends. It is also expanding its exposure to alternative assets like data centres and business parks, reflecting a forward-looking portfolio tilt.

While China's property market remains a concern for some, I see CLI's diversified exposure and prudent capital management as strong buffers. Its focus on Tier 1 cities, paired with operational discipline, allows for risk-adjusted growth.

3️⃣ Strong Balance Sheet and Capital Recycling Discipline

As of its latest report, CLI maintained a healthy gearing ratio below 0.5x and robust interest coverage, giving it headroom to weather rate volatility and seize acquisition opportunities.

It has also demonstrated consistent capital recycling, divesting non-core or mature assets to reinvest into higher-yielding opportunities. This capital discipline not only supports NAV growth, but also boosts ROE over time — a trait I favour in any long-term core holding.

4️⃣ Lodging Business Rebound: An Underrated Catalyst

CapitaLand's Ascott lodging platform is enjoying a strong post-pandemic recovery, with revenue per available unit (RevPAU) surging across key regions. Management has guided for aggressive unit expansion, with a target of 160,000 units by 2025, up from around 105,000 today.

As lodging revenues feed into fee income and valuation uplift, this segment could emerge as a meaningful earnings growth driver over the next 2–3 years.

5️⃣ Attractive Valuation and Dividend Yield

Despite its strong fundamentals, CLI currently trades at an attractive valuation of under 1x P/B, with a dividend yield of ~4.5–5% (based on recent payouts). For a stable, growing asset manager with real estate as collateral, I see this as a significant margin of safety.

When comparing this with global peers, CLI is undervalued not due to operational weakness, but likely due to broader macro pessimism in the region — which I see as an opportunity, not a deterrent.

Conclusion: A Core Compounder for the Long Term

My investment in CapitaLand Investment reflects my belief in:

# Asia's secular urban growth

# The rising importance of real asset managers

# The power of recurring, fee-based earnings

# The company's excellent execution track record

It's rare to find a company that combines defensiveness, dividend yield, and long-term growth potential at such a reasonable valuation. I'm happy to accumulate CLI for the long haul — and to be paid while waiting.

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