---
endpoint: analytics
pattern: 04 · Peer · valuation compare
status: done
latency_ms: 226709
conversation_id: e545ad22-74a8-4d93-88bc-ee269472c7bd
citations: 2
created: 2026-05-31 17:03:47Z
---

# How does CapitaLand's valuation compare to peers, and what justifies the premium / discount?

# CapitaLand Investment (CLI, SGX:9CI) — Valuation vs Peers

> **Scope note**: "CapitaLand" refers to **CapitaLand Investment Ltd (CLI)** — the listed parent / real-estate fund manager that emerged from the 2021 group restructuring. Its REIT children (CICT, CLAR, CLAS, CLCT, CLINT, CLMT) are separately listed and are part of the SOTP, not direct peers. CLI's true peer group is regional asset-light real-estate fund managers (Asian property fund managers, US/global private-capital platforms). This analysis draws on CLSA's most recent O-PF note on CLI (1 May 2025), CLSA's Singapore Strategy (25 June 2025), and CLI's own 1Q26 business update (29 April 2026).

---

## 1. Headline valuation snapshot

| Metric (2025CL) | CLI (9CI) | Source |
|---|---|---|
| Share price (30 Apr 2025) | **S$2.75** | CLSA [10] |
| 12M target price (CLSA) | **S$3.50** (+27% upside) | CLSA [10] |
| Forward PE (2025CL) | **13.7x** | CLSA [3] |
| Forward PE (2026CL) | **12.6x** | CLSA [3] |
| Price-to-Book (2025CL) | **1.0x** | CLSA [3] |
| Dividend yield (2025CL) | **4.4%** | CLSA [3] |
| ROE (2025CL) | **7.1%** (7.5% in 26CL) | CLSA [3] |
| Net debt / equity (1Q25) | **0.39x** (gearing 39%) | CLSA [15] |
| Market cap | **US$10.5bn** | CLSA [10] |
| Major shareholder | **Temasek 50.5%** | CLSA [10] |

Key observation: CLI trades at **~1.0x book** and a **mid-single-digit ROE (~7%)** — characteristic of a hybrid balance-sheet-heavy / fee-light real estate platform, **not** a pure-play asset-light fund manager (where book multiples of 3–5x and ROEs of 15–25% are typical).

---

## 2. CLSA's RNAV/SOTP — where CLI's value is actually coming from

CLI is not valued on a single P/E or P/B multiple — CLSA uses a **sum-of-the-parts (SOTP) RNAV** because it is structurally a holding company with three distinct value pools [9].

### 2.1 RNAV bridge to S$3.50 [4][6]

| Component | S$/share | % of GAV |
|---|---|---|
| Listed REITs (stakes in 6 CapitaLand-sponsored REITs) | **1.54** | 31% |
| Fee business (capitalised at 15x EV/EBITDA on FY25CL S$528m EBITDA → S$7.92bn) | **1.55** | 31% |
| Investment properties (revalued book) | **0.90** | 18% |
| Stakes in unlisted / private funds | **1.00** | 20% |
| **Gross Asset Value** | **4.99** | 100% |
| Less: adjusted net debt | **(1.49)** | – |
| **Net Asset Value / Target Price** | **S$3.50** | – |

### 2.2 Listed-REIT stakes (S$1.54 of NAV) [5]

| REIT | Ticker | CLI stake | S$m | S$/share |
|---|---|---|---|---|
| CapitaLand Integrated Comm. Trust | CICT SP | 23% | 3,598 | 0.71 |
| CapitaLand Ascendas REIT | CLAR SP | 17% | 2,418 | 0.47 |
| CapitaLand Ascott Trust | CLAS SP | 28% | 943 | 0.18 |
| CapitaLand China Trust | CLCT SP | 24% | 302 | 0.06 |
| CapitaLand India Trust | CLINT SP | 24% | 339 | 0.07 |
| CapitaLand Malaysia Trust | CLMT MK | 41% | 229 | 0.04 |
| **Total** | | | **7,830** | **1.54** |

---

## 3. The Premium / Discount question — three frames

This is where the "vs peers" question requires unpacking because CLI sits awkwardly between three peer groups.

### Frame A: CLI vs pure-play fund managers (Blackstone, Brookfield, KKR)

CLSA applies **15x EV/EBITDA** to CLI's fee business — explicitly **"in line with the fund manager peer historical trading average"** [2]. Globally, listed alternative-asset managers (Blackstone, KKR, Brookfield, Ares) have historically traded **18–25x EV/EBITDA in peak cycles and 12–16x in down-cycles**.

**What justifies the absence of a premium**:
- CLI is **not a pure-play fund manager**. The fee business contributes only **31% of GAV** [4][6]; the remaining 69% sits in balance-sheet real estate and private-fund co-investments.
- This balance-sheet drag is precisely what depresses ROE to ~7% (vs. 15–25%+ for capital-light pure-plays) and pins PB at 1.0x rather than 3–5x.
- CLSA's thesis: "Post the divestment of the development business … the risk profile and return on equity should improve. This is dependent on a conducive interest rate environment for CLI to divest some of its investment properties which offer low returns and act as a drag on ROE. Over time, this should also narrow its discount to RNAV." [7]

### Frame B: CLI vs its own REIT children (CICT, CLAR, etc.)

S-REITs currently trade at a **6.5% forward yield**, or a **422bps yield spread** above Singapore long-bond yields — wider than the **369bps historical average**, implying the REIT sector is cheap [12]. CLSA's top REIT picks are **CICT, KDC REIT, CLAR and FCT** [12]. By comparison, CLI's **4.4% dividend yield** [3] is well below the REIT children — but CLI is not a yield instrument, it is a fund-manager/asset-recycler. The fee-business component is what investors are paying a premium for, not the dividend.

### Frame C: CLI vs Singapore property developers (City Developments, UOL, Hongkong Land)

Within CLSA's Singapore property coverage matrix, CLI is grouped with **Developers** (CapitaLand, HK Land) [Singapore strategy chunk index 109]. Singapore developers historically trade at **30–50% discounts to RNAV**. CLI at S$2.75 vs RNAV S$3.50 implies **~21% discount to NAV** — i.e., CLI trades at a **NARROWER discount** than peer Singapore developers, which is justified by:
- Lower exposure to capex-heavy, cycle-sensitive development (largely divested in 2021).
- A recurring fee stream (CapitaLand reported **+10% YoY FRR growth to S$310m in 1Q26**) [16] that should command a higher multiple than lumpy development earnings.
- The fund-management platform is **scale-defensible** (S$117bn FUM at 1Q25) [15] versus developer NAVs which mark-to-market property values.

---

## 4. What justifies the current implied **discount** to NAV (~21%)

CLSA explicitly identifies the gating factors keeping CLI below RNAV:

1. **Balance-sheet drag**: ~S$4.6bn of investment properties (S$0.90/share) and S$5.1bn of unlisted-fund stakes (S$1.00/share) [4] earn low returns relative to fee income, pulling ROE down to **7.1% (2025CL)** [3]. Pure-play managers earn 15–25%+ on capital.
2. **Asset-recycling friction in high-rate regime**: Key risks include "a prolonged elevated interest rate environment slowing down asset recycling for CLI and hence slowing AUM growth resulting in a subpar ROE profile" [9].
3. **China overhang**: ~1/3 of assets sit in China, where the property market remains weak [8]. CLI is trying to recycle ~S$3bn of China assets into a proposed C-REIT but this "could take time given tight debt headroom for C-Reits and restrictive regulations for any acquisition in the first year of listing" [1].
4. **Soft underlying operations**: 1Q25 revenue fell 24% YoY on CLAS deconsolidation; ex-CLAS revenue was up only 4%, with REIB segment –6% YoY [1][15]. Private funds revenue actually fell 4% YoY and the fee-FUM ratio compressed 2bps to 46bps [15].
5. **Operating headwinds at fund level**: 1Q25 lodging occupancy weakened in Australia (97% → 89% YoY) and UK/Europe (95% → 88%); retail tenant sales went negative in Singapore (-1.3%) and barely positive in China (+0.3%) [11].

---

## 5. What justifies the embedded **premium** (vs developer peers)

1. **Asset-light fee growth re-accelerating**: CLI's 1Q26 update shows fee-related revenue **+10% YoY to S$310m**, with Private Funds Management +58% YoY and Listed Funds Management +14% YoY [16]. This is the line item that supports the 15x EV/EBITDA multiple [2].
2. **Balance sheet resilience**: ND/Equity steady at 0.39x with **S$7.4bn of debt headroom**, ICR 3.6x, 3.6-year average debt maturity, 72% debt fixed at 4.1% cost [15] — gives flexibility for acquisitions and divestment timing.
3. **Improving capital efficiency**: Effective stakes in balance-sheet investments declined from S$4.3bn (1Q25) to S$3.9bn (1Q26) on completion of Dalian IT Park and One iPark Phase 3 divestments [17] — the recycling story is grinding forward.
4. **Catalysts ahead**: Rate cuts would accelerate asset recycling, lift REIT valuations and let CLI divest investment properties at-or-above book — all directly margin-accretive and discount-narrowing [8].
5. **ESG score 70.6** vs country/sector averages of 57.3/55.4 [14] — a sustainability premium versus regional property peers.

---

## 6. Bottom line

CapitaLand Investment trades at **~21% discount to CLSA's S$3.50 RNAV target** (current S$2.75) [4][10]. That discount sits **narrower than pure Singapore developers (typically 30–50% off NAV)** but **wider than capital-light fund-manager peers** (where 15x EV/EBITDA on fee EBITDA still leaves the balance-sheet drag unrewarded).

- **The premium vs developers is justified** by recurring fee growth (+10% FRR YoY in 1Q26) [16], scale (S$117bn FUM) [15], and lower cycle sensitivity.
- **The discount vs pure-play fund managers is justified** by the **69% of GAV still tied up in balance-sheet investments and co-investment stakes** [4] that earn sub-cost-of-capital returns, and by macro/China asset-recycling friction [1][8].
- **The thesis to close that discount** rests on (a) Fed rate cuts enabling asset recycling above book, (b) the C-REIT vehicle absorbing China assets, and (c) the fee business continuing to compound — at which point ROE should rerate from 7% toward double digits and the multiple gap to global fund-manager peers narrows [7][9].

CLSA reiterates **Outperform, TP S$3.50** with the fee business explicitly pegged at the fund-manager-peer historical 15x EV/EBITDA average [2][10].

---

**Sources**
- [1] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 (Yew Kiang Wong, Elizabeth Leng) — 607957865LinqAlpha.PDF
- [2] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — chunk on 15x EV/EBITDA fee business multiple
- [3] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Financial summary table (FY22–26CL)
- [4] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — SOTP RNAV table (S$3.50 NAV/share)
- [5] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Listed REIT stake table
- [6] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — RNAV per-share breakdown
- [7] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Investment thesis
- [8] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Catalysts
- [9] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Investment risks
- [10] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Share statistics (TP S$3.50, +27% potential, Temasek 50.5%)
- [11] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Financials at a glance (P&L, BS, CF)
- [12] Singapore strategy (Strength in defence) — CLSA, 25 June 2025 — S-REIT yield spread and top picks
- [13] Singapore strategy (Strength in defence) — CLSA, 25 June 2025 — Key Singapore market picks
- [14] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Blended ESG score
- [15] CapitaLand - O-PF (Muted start) — CLSA, 1 May 2025 — Gearing, ICR and 1Q25 FRR commentary
- [16] CapitaLand Investment Q1 2026 Business Update — CapitaLand Investment Ltd, 29 April 2026 — Fee-related revenue +10% YoY to S$310m
- [17] CapitaLand Investment Q1 2026 Business Update — CapitaLand Investment Ltd, 29 April 2026 — Effective stakes by holding structure

## Citations

- [16] **CapitaLand Investment Limited, Q1 2026** · external
- [17] **CapitaLand Investment Limited, Q1 2026** · external

