CapitaLand Mall Trust - DBS Research 2020-05-29: Breaking Free; Upgrade To BUY

CAPITALAND MALL TRUST (SGX:C38U) | SGinvestors.io CAPITALAND MALL TRUST (SGX:C38U)

CapitaLand Mall Trust - Breaking Free

  • 90% of CapitaLand Mall Trust's tenants allowed to resume operations as early as the first week of July.
  • Suburban retail malls likely lead retail recovery.
  • We estimate that c.52% of CapitaLand Mall Trust’s revenue originate from dominant malls.
  • Target price pegged to 1.0x P/BV.



Upgrade to CapitaLand Mall Trust to BUY; Target Price revised to S$2.15.

  • We upgrade our rating to BUY on CapitaLand Mall Trust (SGX:C38U) with a revised target price of S$2.15 as retail tenants will be given the green light to resume operations as early as the first week of July.
  • CapitaLand Mall Trust is currently trading at a P/NAV of 0.9x, at -2 standard deviation (SD) levels. History shows that CapitaLand Mall Trust does not trade below book for long, and the current range represents an attractive risk-to-reward ratio.
  • Our new target price implies a price-to-book of 1.0x and a target yield of 4.6% on our FY20 dividend estimates.


Where we differ: Portfolio malls will not recover at the same pace.

  • We believe that dominant suburban malls will take the lead in shopper traffic recovery post Circuit Breaker. Dominant retail malls contributed c.52% of CapitaLand Mall Trust’s revenue in FY19, of which half was from suburban malls.
  • While central retail malls continue to face moderately weak sentiments, the pace of recovery may surprise on the upside with demand from returning workers and pent-up demand from local shoppers. Additional government support and waivers from retail landlords will also help to accelerate the ramp-up process for the tenants most affected by the pandemic.


Vast majority of tenants allowed to reopen as early as first week of July.







Singapore Research Team DBS Group Research | Derek TAN DBS Research | https://www.dbsvickers.com/ 2020-05-29
SGX Stock Analyst Report BUY UPGRADE HOLD 2.15 UP 1.750



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