CAPITALAND MALL TRUST
C38U.SI
CapitaLand Mall Trust: Solid blue chip attractively priced
Valuations attractive
FY16F yield +1.5 SD above 5-year mean
Expect stable DPU growth
Risk reward compelling
- Following CapitaLand Mall Trust’s (CMT) recent share price weakness, we believe its risk-reward is now compelling, with the stock trading at 6.0% FY16F distribution yield. This is 1.5 standard deviations above its 5-year forward average of 5.5%.
- From a book value perspective, CMT’s FY16F P/B ratio is 1.06x, and this is also attractive, in our view, as it is close to 1.5 standard deviations below its 5-year forward mean of 1.16x.
Seeking to unlock asset value
- CMT’s management is constantly seeking to enhance the value of its portfolio by carrying out asset rejuvenation works and tenant repositioning exercises to make its malls more relevant to consumers.
- An example of this is Tampines Mall, whereby CMT reconfigured its second and third level to boost its fashion offerings, bringing in new tenants such as H&M. It is also speeding up phase two of its AEI at IMM Building.
- More recently, CMT announced its plans to redevelop Funan DigitaLife Mall into an integrated development, given its untapped GFA of ~388,000 sqft. As a result of this, the mall is expected to be closed in 3Q16, and redevelopment works will take approximately three years.
Still room for growth
- While we are cognisant of challenges facing retail landlords, we expect CMT to continue delivering stable growth to its unit holders.
- We forecast DPU growth to come in at 2.3% and 2.5% for FY15 and FY16, respectively, partly driven by contribution from its recent Bedok Mall acquisition.
- We have a BUY rating on CMT, with a fair value estimate of S$2.09. This translates into an expected total potential returns of 16%.
Wong Teck Ching Andy
OCBC Securities
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http://www.ocbcresearch.com/
2015-12-11
OCBC Securities
SGX Stock
Analyst Report
2.09
Same
2.09
