CapitaLand Mall Trust - Maybank Kim Eng 2020-07-22: Before The Spend

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

CapitaLand Mall Trust - Before The Spend


Recovery off to a slow start, 6.0% dividend yield

  • CapitaLand Mall Trust (SGX:C38U)’s 2Q20 DPU was down 27.7% y-o-y, as it retained a balance SGD46.4m of distributable income from 1Q20, after releasing SGD23.2m in the quarter. See CapitaLand Mall Trust Announcements.
  • Shopper traffic has returned since the start of Singapore’s phase 2 reopening and is set to rise further with relaxation measures, even as tenant sales recovery lacks visibility. The additional rent waiver lowers our FY20 DPU by 5%, but with fundamentals improving, we see a further release of its retained taxable income in 2H.
  • CapitaLand Mall Trust's valuations are undemanding at 6.0% FY21 yield and 1.0x P/B. Its balance sheet remains strong with a low 34.4% leverage, 4.2x interest cover, and SGD2.9-4.4b in debt headroom.
  • Maintain BUY with a DDM-based Target Price of SGD2.35 (COE: 6.3%, LTG: 1.5%).





Lower occupancies, rental reversion at +0.1%

  • CapitaLand Mall Trust's 2Q20 revenue fell 39.8% y-o-y, 44.2% q-o-q and NPI decreased 48.9% y-o-y, 54.1% q-o-q with lower gross rental income arising from rental waivers of SGD74.1m granted to tenants during Singapore’s circuit breaker period.
  • Portfolio occupancy fell from 98.5% to 97.7% with weaker occupancies at both its
    • downtown assets - Clarke Quay (95.9% to 92.3%), Raffles City (98.5% to 97.6%), Atrium @ Orchard (98.5% to 97.4%), and
    • suburban malls - IMM (99.4% to 98.2%), Bedok Mall (98.8% to 96.9%), and Lot One (98.4% to 97.6%).
  • Rental reversion was at +0.1% for 1H20 (vs +1.6% in 1Q20, with a mixed performance across its portfolio. We expect Clarke Quay to remain a drag in the near term.


A better 2H, slower FY20-21E growth






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-07-22
SGX Stock Analyst Report BUY MAINTAIN BUY 2.35 DOWN 2.400



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