CapitaLand China Trust: Revenue remains resilient, led by retail assets

Revenue remains resilient, led by recovery in retail segment

Revenue declined 5.3% year-on-year, largely due to divestment of CapitaMall Yuhuating. Gross revenue fell from RMB439.7 million in 1Q25 to RMB416.4 million in 1Q26. Excluding Yuhuating's contribution in 1Q25, same-store revenue declined by a modest 0.4% year-on-year, demonstrating the underlying resilience of the retained portfolio.

Net property income (NPI) down 3.5% year-on-year; same-store NPI up 1.3% year-on-year. NPI declined from RMB292.5 million in 1Q25 to RMB282.4 million in 1Q26. Encouragingly, on a same-store basis excluding Yuhuating, NPI grew 1.3% year-on-year, driven by a 3.7% year-on-year in cost reduction — a positive sign of operating leverage.

Retail portfolio - active tenancy remixing driving traffic and sales 

Retail portfolio is the largest contributor to CapitaLand China Trust’s gross rental income.  As at 31 March 2026, the retail assets account for 70.2% of the gross rental income.

The retail portfolio delivered an encouraging operational performance in 1Q FY26, with shopper traffic up 3.3% year-on-year and tenant sales up 5.5% year-on-year.

The introduction of three new supermarkets contributed Rmb80 million in 1Q FY26 tenant sales and drove material traffic growth at CapitaMall Xuefu (+13.7% year-on-year), CapitaMall Xizhimen (+6.9% year-on-year) and CapitaMall Wangjing (+4.1% year-on-year).

Key trade sectors showing sales improvements include Toys & Hobbies, IT & Telecommunications, Jewellery & Watches and Food & Beverage. The Toys & Hobbies reported 59.6% year-on-year increase in sales, driven by the rising popularity of the collectible toy market.  CapitaLand China Trust’s 4th largest tenant - POP MART reflects this trend well.

Occupancy cost fell to 17.0% in 1Q FY26 from 27.5% in 2022, reflecting a material improvement in tenant health and affordability. Lower occupancy costs support lease renewal and tenant retention, reducing the risk of vacancies.

CapitaLand China Trust continues to strategically remix its tenant base towards higher-traffic categories. Food & Beverage, already the dominant category at 39.3% of retail gross rental income (GRI) is being further enhanced with trending dining brands. IT & Telecommunications grew from 3.7% to 4.8% of GRI, reflecting the asset enhancement initiatives (AEIs) at CapitaMall Xuefu and Wangjing. Sporting Goods & Apparel expanded from 3.1% to 4.1%, with new signings from Decathlon, The North Face and ANTA Guanjun.

New-to-market concepts at Rock Square in Guangzhou are showing promising results. The Heytea Bake Lab (Guangzhou's first store) delivered an 84% uplift in gross turnover (GTO) versus the trailing six-month average. MAOGEPING, a high-end Chinese beauty brand, exceeded its monthly sales target in its first full month. These tenant additions strengthen Rock Square's positioning as a premium experiential destination.

However, the headline retail rental reversion of -2.1% in 1Q FY26 warrants attention. Management noted this primarily reflects strategic lease actions at two major anchor positions. Excluding these two planned anchor adjustments, retail reversion would have been -1.6%, suggesting the broader retail portfolio is near rental stabilisation.

Business park - stable occupancy but weak rental reversion  

Business park’s occupancy was 86.0% as at 31 March 2026, slightly down from 86.7% at end-2025. The rental reversion was -11.3% in 1Q FY26, reflecting the challenging leasing environment at Singapore-Hangzhou Science & Technology Park Phase I and II (SHSTP Phase I and II), Ascendas Innovation Towers (AIT) and Ascendas Innovation Hub (AIH), where submarket vacancy remains elevated.

More importantly, CapitaLand China Trust's assets are outperforming their respective submarket occupancy rates. Ascendas Xinsu Portfolio achieved 95.9% occupancy against the Suzhou submarket rate of 73.9%. The combined AIT and AIH occupancy of 84.5% compares favourably to the Xi'an submarket rate. SHSTP Phase I and II outperformed Hangzhou submarket occupancy as well.  

Management secured approximately 59,400 sqm of renewals and new leases in 1Q FY26, representing about 8.3% of total Business Park net leasable area.  

Logistics park reported upside surprise in rental reversion

The logistics park portfolio posted a strong operational quarter, with committed occupancy rising to 99.0% as at 31 March 2026, up from 98.1% at end-2025. Three of four parks (Shanghai Fengxian, Kunshan Bacheng and Wuhan Yangluo) maintained 100% occupancy throughout.

The standout highlight is the dramatic improvement in rental reversion. Following proactive leasing of 17,400 sqm of executed space, logistics park rental reversion improved from -24.5% in FY2025 to -1.4% in 1Q FY26. This strongly suggests the logistics rental market is bottoming, with Chengdu Shuangliu Logistics Park occupancy also recovering from 82.9% in March 2025 to 96.2% as at March 2026.

While logistics parks contribute only 3.3% of portfolio gross rental income (GRI), the improvement in this segment removes a meaningful headwind to distribution growth going forward.

Portfolio overview

Weighted average lease expiry (WALE) remains stable at 2.5 years as at 31 March 2026, from 2.6 years as at 31 December 2025. 

The REIT maintained strong occupancy levels overall, with retail properties holding up at 97.0%. 

Business parks saw occupancy dip to 86.0%, reflecting continued leasing softness in office and business park space. Management expects this segment to remain competitive.

Logistics parks continued to deliver very high occupancy at 99.0%, supported by strong demand from distribution and e-commerce tenants.  

Besides actively managing the lease expiry to maintain a high level of occupancy, CapitaLand China Trust will continue to look for acquisition opportunities in the retail segment.  To recap, Yuhuating was divested at around 6% yield.  To fill this gap, CapitaLand China Trust aim to acquire retail assets at around 7% yield.     

Healthy balance sheet 

The debt maturity profile looks well laddered. Only 6.6% of total debt falls due in 2026, rising gradually to a peak in 2029 at 26.5% before tapering off again, which gives management time to refinance opportunistically or adjust the currency of funding. The mix of SGD and RMB borrowings across bank loans and bonds also spreads funding sources, reducing reliance on any one market while keeping currency exposure aligned with the underlying China-focused assets.

Proportion of RMB denominated debt remains stable, at 59% as at 31 March 2026, from 60% as at 31 December 2026. 

CapitaLand China Trust's financial position remains healthy, with aggregate leverage at 41.4% as at 31 March 2026 — up marginally from 40.7% at end-2025. 

The Trust has S$1,730.4 million in total debt with a weighted average term to maturity of 3.2 years.

The most significant positive development in capital management is the continued reduction in cost of debt. Average cost of debt fell to 3.10% in 1Q FY26 from 3.32% at end-2025 and 3.51% in 1Q25 — a 40 basis point decline year-on-year. This was achieved by growing the proportion of lower-cost RMB-denominated debt to 59% of total debt. The RMB loan prime rate (LPR) has declined meaningfully, and management expects further benefits from refinancing of higher-cost SGD debt with RMB instruments.

Interest coverage ratio (ICR) improved to 2.9x in 1Q FY26 (end-2025: 2.8x). A 100bps increase in the weighted average interest rate would reduce ICR to 2.3x, while a 10% decrease in EBITDA would lower it to 2.6x — both scenarios suggest limited headroom.

Maintain BUY and target price at S$0.88

Currently, CapitaLand China Trust is trading at S$0.685, offering FY26 distribution yield of 7.0%. 

In terms of P/B ratio, CapitaLand China Trust is trading at a discount to its book value, at P/B 0.76x.  In comparison, Lendlease Global Commercial REIT is trading at 0.7x and Mapletree Pan Asia Commercial Trust is trading at P/B 0.8x. 

We maintain our BUY rating with a target price at S$0.88. The macroeconomic environment in China is improving.  China's GDP grew 5.0% year-on-year in 1Q FY26, accelerating from 4.5% in 4Q25. This marks an improvement in economic momentum and provides a supportive backdrop for CapitaLand China Trust's retail and business park portfolios.

The near-term catalysts includes the bottoming out in the Logistics park segment; the new C-REIT format to drive quicker capital recycling process and the continual recovery in the retail portfolio.

Click here to download the full report. 

Related links:

• CapitaLand China Trust share price and share price target
• CapitaLand China Trust dividend history and forecast

Check out Beansprout's guide to the best stock trading platforms in Singapore with the latest promotions to invest in CapitaLand China Trust.

Join the Beansprout Telegram group for the latest insights on Singapore stocks, REITs, bonds and ETFs. 

Important Disclosures

Analyst Certification and Disclosures 

The analyst(s) named in this report certifies that (i) all views expressed in this report accurately reflect the personal views of the analyst(s) with regard to any and all of the subject securities and companies mentioned in this report and (ii) no part of the compensation of the analyst(s) was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst herein. The analyst(s) named in this report (or their associates) does not have a financial interest in the corporation(s) mentioned in this report.

An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.

Company Disclosure

Global Wealth Technology Pte Ltd (“Beansprout”) does not have any financial interest in the corporation(s) mentioned in this report.

Disclaimer

This report is provided by Beansprout for the use of intended recipients only and may not be reproduced, in whole or in part, or delivered or transmitted to any other person without our prior written consent. By accepting this report, the recipient agrees to be bound by the terms and limitations set out herein.

You acknowledge that this document is provided for general information purposes only. Nothing in this document shall be construed as a recommendation to purchase, sell, or hold any security or other investment, or to pursue any investment style or strategy. Nothing in this document shall be construed as advice that purports to be tailored to your needs or the needs of any person or company receiving the advice. The information in this document is intended for general circulation only and does not constitute investment advice. Nothing in this document is published with regard to the specific investment objectives, financial situation and particular needs of any person who may receive the information. 

Nothing in this document shall be construed as, or form part of, any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities. The data and information made available in this document are of a general nature and do not purport, and shall not in any way be deemed, to constitute an offer or provision of any professional or expert advice, including without limitation any financial, investment, legal, accounting or tax advice, and shall not be relied upon by you in that regard. You should at all times consult a qualified expert or professional adviser to obtain advice and independent verification of the information and data contained herein before acting on it. Any financial or investment information in this document are intended to be for your general information only. You should not rely upon such information in making any particular investment or other decision which should only be made after consulting with a fully qualified financial adviser. Such information do not nor are they intended to constitute any form of financial or investment advice, opinion or recommendation about any investment product, or any inducement or invitation relating to any of the products listed or referred to. Any arrangement made between you and a third party named on or linked to from these pages is at your sole risk and responsibility. 

You acknowledge that Beansprout is under no obligation to exercise editorial control over, and to review, edit or amend any data, information, materials or contents of any content in this document. You agree that all statements, offers, information, opinions, materials, content in this document should be used, accepted and relied upon only with care and discretion and at your own risk, and Beansprout shall not be responsible for any loss, damage or liability incurred by you arising from such use or reliance. 

This document (including all information and materials contained in this document) is provided “as is”. Although the material in this document is based upon information that Beansprout considers reliable and endeavours to keep current, Beansprout does not assure that this material is accurate, current or complete and is not providing any warranties or representations regarding the material contained in this document. All opinions contained herein constitute the views of the analyst(s) named in this report, they are subject to change without notice and are not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report. Any reference to past performance should not be taken as an indication of future performance. To the fullest extent permissible pursuant to applicable law, Beansprout disclaims all warranties and/or representations of any kind with regard to this document, including but not limited to any implied warranties of merchantability, non-infringement of third-party rights, or fitness for a particular purpose. 

Beansprout does not warrant, either expressly or impliedly, the accuracy or completeness of the information, text, graphics, links or other items contained in this document. Neither Beansprout nor any of its affiliates, directors, employees or other representatives will be liable for any damages, losses or liabilities of any kind arising out of or in connection with the use of this document. To the best of Beansprout’s knowledge, this document does not contain and is not based on any non-public, material information. The information in this document is not intended for distribution to, or use by, any person or entity in any jurisdiction where such distribution or use would be contrary to law or regulation, or which would subject Beansprout to any registration requirement within such jurisdiction or country. Beansprout is not licensed or regulated by any authority in any jurisdiction or country to provide the information in this document.

As a condition of your use of this document, you agree to indemnify, defend and hold harmless Beansprout and its affiliates, and their respective officers, directors, employees, members, managing members, managers, agents, representatives, successors and assigns from and against any and all actions, causes of action, claims, charges, cost, demands, expenses and damages (including attorneys’ fees and expenses), losses and liabilities or other expenses of any kind that arise directly or indirectly out of or from, arising out of or in connection with violation of these terms, use of this document, violation of the rights of any third party, acts, omissions or negligence of third parties, their directors, employees or agents. To the extent permitted by law, Beansprout shall not be liable to you, any other person, or organization, for any direct, indirect, special, punitive, exemplary, incidental or consequential damages, whether in contract, tort (including negligence), or otherwise, arising in any way from, or in connection with, the use of this document and/or its content. This includes, without limitation, liability for any act or omission in reliance on the information in this document. Beansprout expressly disclaims and excludes all warranties, conditions, representations and terms not expressly set out in this User Agreement, whether express, implied or statutory, with regard to this document and its content, including any implied warranties or representations about the accuracy or completeness of this document and the content, suitability and general availability, or whether it is free from error. 

If these terms or any part of them is understood to be illegal, invalid or otherwise unenforceable under the laws of any state or country in which these terms are intended to be effective, then to the extent that they are illegal, invalid or unenforceable, they shall in that state or country be treated as severed and deleted from these terms and the remaining terms shall survive and remain fully intact and in effect and will continue to be binding and enforceable in that state or country. 

These terms, as well as any claims arising from or related thereto, are governed by the laws of Singapore without reference to the principles of conflicts of laws thereof. You agree to submit to the personal and exclusive jurisdiction of the courts of Singapore with respect to all disputes arising out of or related to this Agreement. Beansprout and you each hereby irrevocably consent to the jurisdiction of such courts, and each Party hereby waives any claim or defence that such forum is not convenient or proper.