CapitaLand Mall Trust - OCBC Investment 2019-06-06: Get Ready To Work-Live-Play At Funan


CapitaLand Mall Trust - Get Ready To Work-Live-Play At Funan

  • More updates on Funan.
  • Retail 92% leased; office 98%.
  • Boost to DPU.

Funan retail to open doors on 28 June

  • CAPITALAND MALL TRUST (SGX:C38U) announced early this week that Funan will be opening its doors on 28 June, following its redevelopment for three years. The opening date comes in two months ahead of its original schedule.
  • Funan is poised to excite shoppers in Singapore’s Civic District, with more than 180 brands clustered around six passion themes: Tech, Craft, Play, Fit, Chic, and Taste. Approximately 30% of its tenants are new-to market brands and new concept stores or flagships. These include Afuri Ramen, Brompton Junction and Dyson. Meanwhile, more than 60% of the brands originate from Singapore, and these include Drumstruck and Tiong Bahru Bakery. Other anchor tenants include Golden Village (latest seven-screen multiplex), FairPrice Finest and KOPItech (Kopitiam’s latest concept).

High pre-commitment secured

  • According to CapitaLand Mall Trust, Funan has achieved pre-committed occupancy of ~92% for its retail component and ~98% for its twin office blocks.
  • Management expects more retail leases to be signed in the coming months. We believe this firm commitment level is a testament to Funan’s unique positioning and CapitaLand Mall Trust’s strong marketing efforts, notwithstanding the soft macroeconomic backdrop. More than 30% of Funan’s brands are new to CapitaLand’s portfolio.

More significant contribution expected in FY20

  • We raise our FY19 and FY20 DPU forecasts by 0.5% and 2.0%, respectively, on faster-than-expected ramp up at Funan.
  • Based on our projections, Funan’s retail and office component is expected to contribute in aggregate 3.2% and 7.6% of our FY19 and FY20 NPI forecasts, respectively. Correspondingly, our fair value estimate inches up from S$2.32 to S$2.33.
  • Whilst we see CapitaLand Mall Trust as a defensive shelter amid the ongoing trade tensions given its resilient portfolio and strong track record, we believe these positives have already been priced in.
  • CapitaLand Mall Trust is currently trading at blended FY19/20F distribution yield of 5.0%, as at 4 June closing price. This is 1.3 standard deviations below its 8-year mean of 5.4%. See CapitaLand Mall Trust's share price, CapitaLand Mall Trust's dividend history.

Wong Teck Ching Andy CFA OCBC Investment Research | https://www.iocbc.com/ 2019-06-06
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.320 SAME 2.320