CAPITALAND MALL TRUST
C38U.SI
CapitaLand Mall Trust - Stable Results Amid Improved Consumer Sentiment
- 3Q17 DPU unchanged YoY.
- Higher portfolio occupancy.
- Slight 1.7% dip in rental reversions.
3Q17 results within our expectations
- CapitaLand Mall Trust (CMT) reported a stable set of 3Q17 results which met our expectations.
- Although gross revenue fell marginally by 0.2% YoY to S$169.4m, NPI rose 1.6% to S$121.4m due to lower property tax and utility expenses. This translated into a NPI margin of 71.6% (+1.2 ppt YoY). DPU was unchanged at 2.78 S cents.
- On a 9M17 basis, CMT recorded gross revenue of S$510.1m, which was a decline of 2.0% and represented 74.6% of our FY17 forecast. DPU was flat at 8.26 S cents (+0.1%) and accounted for 74.7% of our full-year projection.
- Management had retained S$7.6m of its taxable income available for distribution in 9M17, or ~0.214 S cents per unit (9M16: S$12.0m), which is expected to be distributed to unitholders in 4Q17.
Rental reversions remain negative, but more upbeat sentiment
- CMT saw a slight negative rental reversion of 1.7% for 9M17 (1H17: -1.6%), with the main drag coming from Westgate (-10.5%), Bedok Mall (- 6.0%) and Tampines Mall (-4.3%). The negative rental reversion at Tampines Mall was attributed to a change in tenant mix for a lease from banking to F&B.
- Looking ahead, CMT only has 3.1% of its gross rental income expiring in 4Q17, but a potential risk could come from the 30% of expiries due in 2018, which include 17 anchor and mini-anchor tenant leases. There is a likelihood of a change in trade mix for some of these leases as CMT seeks to reposition its malls.
- Shopper traffic (+0.2%) and tenants’ sales psf per month (flat) were stable in 9M17, but overall portfolio occupancy saw a slight uptick from 98.6% (as at 30 Jun 2017) to 99.0%. Management noted a slight improvement in consumer sentiment, and this was also reflected in Singapore’s retail sales index excluding motor vehicles (+2.0% and +3.7% YoY in Jul and Aug, respectively).
Maintain BUY
- We fine-tune our assumptions, which include lowering our finance cost projections due to the expected repayment of borrowings from CMT’s divestment of the serviced residence component in the Funan integrated development.
- Our FY17 and FY18 DPU forecasts are lifted by 0.5% and 0.4%, respectively.
- Maintain BUY on CMT with an unchanged fair value estimate of S$2.20.
Wong Teck Ching Andy CFA
OCBC Investment
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http://www.ocbcresearch.com/
2017-10-23
OCBC Investment
SGX Stock
Analyst Report
2.20
Same
2.20
