CAPITALAND MALL TRUST (SGX:C38U)
CapitaLand Mall Trust - Another Pedestrian Quarter
In line, maintain HOLD
- We have kept forecasts unchanged following in-line CapitaLand Mall Trust's 3Q18 results with DPU up 5.0% y-o-y (+1.0% y-o-y excluding capital distributions). Operating metrics, however, remained weak with slower +0.6% YTD rental reversions compared to VivoCity’s +5.8% y-o-y as its tenants’ sales increased 2.8% y-o-y.
- While we see an unexciting rental outlook for retail, we see destination malls delivering stronger occupancy and rental growth.
- Our pick remains Frasers Centrepoint Trust (SGX:J69U) for its strengthening suburban mall footprint, visible growth drivers and potential acquisition catalysts.
- Maintain HOLD with DDM-based Target Price SGD2.15 (COE: 7.1%, LTG: 1.5%).
Metrics soft, smaller assets weaker
- CapitaLand Mall Trust's 3Q18 revenue and NPI both rose 98.0% to 98.5% at end-Sep 2018.
- Rental reversions remained weak at +0.6% YTD, from +0.8% in 1H, while shopper traffic declined 18% y-o-y even as tenant sales rose 0.5% y-o-y. While reversions across its portfolio were mostly positive, its weaker assets – JCube and Bt Panjang Plaza saw weaker competition in the respective sub-markets.
Funan opening, AEI works on track
- Funan is set to open in 2Q19, with pre-committed occupancies based on leases signed and in advanced negotiations at 70% and 60% for its retail and office components. We expect revenue contribution from 2H19.
- Other DPU drivers include AEI works at Westgate and Tampines Mall which are on track to complete in 4Q18.
Westgate deal could add 1.5% to DPU
- CapitaLand Mall Trust received approval at its EGM to acquire the remaining 7% interest in Infinity Mall Trust (Westgate) from its sponsor. The purchase price of SGD789 implies a property yield of 4.3% or SGD2,746 psf. Afterwards, CapitaLand Mall Trust's concentration from its three malls in the west of Westgate rises from 12% to 18% of AUM.
- Assuming the deal is fully-debt funded (at interest rate of 3.25- 3.5%), FY19 DPU could rise by 36%.
- We will adjust estimates upon deal completion on 1 Nov.
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2018-10-25
SGX Stock
Analyst Report
2.150
SAME
2.150