CapitaLand Mall Trust - Maybank Kim Eng 2020-05-03: A Slower Recovery

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

CapitaLand Mall Trust - A Slower Recovery


1Q20 operationally in line, 6.5% dividend yield

  • CapitaLand Mall Trust (SGX:C38U)’s 1Q20 was in line operationally (to both consensus and MKE), even as DPU fell 70.5% y-o-y as it retained SGD69.6m of income.
  • We lowered earnings by 6-15% to reflect its rental-relief package, lower occupancies and near-term rent pressure. CapitaLand Mall Trust Share Price have retreated further than the market in three months and YTD.
  • Near-term DPU visibility remains low, but even after factoring in our cuts, valuations are undemanding at 6.5% FY21 dividend yield and 0.9x P/B.
  • CapitaLand Mall Trust's balance sheet meanwhile is sound with low 33.3% leverage, 4.6x interest cover and SGD2.9-4.4b in debt headroom for deals.
  • Maintain BUY with lower DDM-based SGD2.40 Target Price (COE of 6.4% and long-term growth of 1.5%).



Lower occupancies, rental reversion at +1.6%

  • CapitaLand Mall Trust's 1Q20 revenue and NPI rose 6.0% y-o-y and 5.9% y-o-y, helped by the opening of Funan in Jun 2019, which partially offset the amortisation of its rental rebates to tenants affected by Covid-19. Excluding Funan, revenue would have declined by 2.2% y-o-y.
  • Its portfolio occupancy fell q-o-q from 99.3% to 98.5%, with stable performance except for Clarke Quay (100% to 95.9%).
  • Rental reversion was at +1.6% (against +0.8% for FY19), but the outlook remains weak with slower shopper traffic and tenant sales, down 9.1% y-o-y and 7.5% y-o-y due to the enforcement of social distancing measures. Supermarkets were a lone bright spot, with sales up 13.1% y-o-y.




Eyeing a weaker 2Q, slower FY20-21E growth






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-05-03
SGX Stock Analyst Report BUY MAINTAIN BUY 2.40 DOWN 2.700



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