CapitaLand Mall Trust - RHB Invest 2015-10-23: Encouraged By Higher Traffic Flow & Tenant Sales

CapitaLand Mall Trust - RHB Invest 2015-10-23: Encouraged By Higher Traffic Flow & Tenant Sales CAPITALAND MALL TRUST C38U.SI 

CapitaLand Mall Trust - RHB Invest 2015-10-23: Encouraged By Higher Traffic Flow & Tenant Sales

  • CMT’s 3Q15/9M15 results were within our expectations, as it reported DPU growth of 9.6%/4.9%. 
  • Maintain BUY, with a lower TP of SGD2.29 (from SGD2.42, 11.7% upside). 
  • Despite its lower rental reversion of 4.1% in 9M15, we remain optimistic on the retail scene as we anticipate heavier traffic footfall and higher tenant sales within its portfolio. 
  • In addition, we also like its proactive portfolio management as it acquired Bedok Mall at a cap rate of 5.1%, and divested of Rivervale Mall at an estimated cap rate of 3.8% in the last quarter. 


 No surprises. 

  • CapitaLand Mall Trust’s (CMT) DPU rose 9.6%/4.9% YoY for its 3Q15/9M15, meeting 75.3% of our full-year estimates. 3Q15 revenue/net property income (NPI) dipped 1.8%/0.7% YoY respectively, mainly on ongoing asset enhancement initiatives (AEIs) at IMM Building and lower occupancy levels at JCube and Clarke Quay. Its gearing level remained healthy at 33.8%, with a 4.8x interest coverage ratio. 

 Still encouraged by heavier traffic flow and higher tenant sales. 

  • CMT’s overall portfolio occupancy rate remained high, as it rose slightly to 96.8% in spite of ongoing AEIs at some of its malls. Meanwhile, its rental reversion for the nine months registered lower at 4.1% (1H15: 4.6%), mainly dragged by the repositioning of JCube. 
  • Despite the lower rental reversion, we remain positive on the retail scene as we observe a 4.2% YoY increase in shopper traffic, and 4.4% YoY growth in tenant sales psf per month. 

 Adding value to unitholders via AEIs. 

  • CMT completed the conversion of Tampines Mall’s fifth level into a new education hub, with well-known educational centres such as Yamaha Music School. Its second and third levels have been reconfigured to also enhance fashion offerings, introducing new tenants such as H&M into the suburban mall. 
  • IMM Building has also completed its link bridge, which enhances connectivity between IMM Building, Westgate and the Jurong East MRT Station. 

 Maintain BUY with a lower DDM-based TP of SGD2.29. 

  • We continue to like CMT as it is committed to adding value to its portfolio. However, in view of a softer rental reversion, we trim our TP to SGD2.29 from SGD2.42 while maintaining our BUY recommendation.


Ivan Looi RHB Research | Ong Kian Lin RHB Research | http://www.rhbinvest.com.sg/ 2015-10-23
RHB Research SGX Stock Analyst Report BUY Maintain BUY 2.29 Down 2.42


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