CAPITALAND MALL TRUST
C38U.SI
CapitaLand Mall Trust - Tapering Reversions
- 9M15 results in line. Revenue & NPI declined on the back of lower occupancies & tapering rent reversions.
- Improved shopper traffic & tenant sales not translating into stronger rent reversions.
- Remain cautious on retail sector. Maintain SELL, with no change to DPU or SGD1.66 TP, based on yield target of 6.75%.
What’s New
- 9M15 revenue and NPI was down 1% and 0.6% YoY, confirming that times are challenging for retail-asset owners. 3Q15 revenue and NPI were SGD161.7m (-1.8% YoY, +1.3% QoQ) and SGD113.3m (-0.7% YoY, +3.5% QoQ).
- DPU, however, was boosted by 9.6% YoY to 2.98 Scts, by a release of retained taxable income.
- Drags this year have come from:
- steadily weakening rent reversions, from 6.1% in FY14 to 4.1% in 9M15; and
- declining portfolio occupancies, from 98.8% (FY14) to 96.8% (3Q15).
- The fall in occupancy was across 12 of its 16 malls. Of the 12, IMM and Bukit Panjang are under AEI in response to heightened competition.
- On the bright side, shopper traffic and tenant sales have rebounded, by 4.2% and 4.4% in 9M15. Still, this has not translated into a U-turn for its rent reversions.
What’s Our View
- We are still cautious on retail SREITs, owing to a strong supply till 2017 (4.7m sf vs 3m historical demand), the e-commerce threat and labour restrictions driving up tenants’ operating costs.
- Demand is also a concern amid weak employment and income growth.
- No change to our forecasts as 9M15 revenue, NPI and DPU make up 74.5%/75.2%/76.9% of our FY15F.
- FY16 DPU should grow 3.3% from newly acquired Bedok Mall.
- Our TP is still SGD1.66, based on a 6.75% yield target applied to FY16 DPU.
- Maintain SELL.
Joshua Tan
Maybank Kim Eng
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http://www.maybank-ke.com.sg/
2015-10-22
Maybank Kim Eng
SGX Stock
Analyst Report
1.66
Same
1.66
