Saturday, April 20, 2013

CapitaMalls Malaysia Trust : Results Tracking Expectations (MKE)

CapitaMalls Malaysia Trust
Buy (unchanged)
Share price: MYR1.88
Target price: MYR2.01 (unchanged)
Results Tracking Expectations

 Maintain BUY. CMMT’s 1Q13 core net profit of MYR35.8m was within our and market expectations. We maintain our FY13/14/15 earnings forecasts and DCF-based target price of MYR2.01. We keep our BUY rating in anticipation of the imminent injection of Queensbay Mall, which could add 1.7sen to our FY14 DPU to 9.8sen or a 5.2% yield. CMMT is our top pick in the M-REIT space, with a gross FY13 yield of 4.7% yield vs an average of 4.9% among the large-cap REITs.

Results in line. 1Q13 net profit of MYR35.8m (+4.1% YoY; +6.5% QoQ) made up 25% and 24% our and consensus full-year estimates, respectively, supported by positive rental reversions. CMMT’s proposed 1Q13 DPU of 2.18sen (+4.3% YoY) was also within our expectations.

Rental uptrend continues. 1Q13 revenue grew by 4.2% YoY thanks to positive rental reversions at existing malls (Gurney Plaza +13.1%, Sungei Wang Plaza +2%, The Mines +7.9%, ECM +14.8%) on the back of stable occupancy (average: 98.7% in 1Q13, +0.2ppts YoY). CMMT has relatively low interest rate risk, as 76% of its debt is fixed-rate. Its gearing was an unchanged 0.28x at end-1Q13.

Enhancing its assets. The trust will undertake some asset enhancement initiatives at the East Coast Mall (ECM; costs MYR60m) and Gurney Plaza (GP; MYR8m). CMMT intends to improve the tenant mix at East Coast Mall and add more retail space by converting some car park bays on the third floor and reconfiguring existing areas. It also intends to reconfigure Gurney Plaza’s fourth floor furniture zone and improve the tenant mix at this mall.

Injecting a new asset soon? We see a good chance that Queensbay Mall in Penang (NLA: 888,404 sq ft, owned by CapitaMalls Asia) could be injected into CMMT. The mall has had positive rental reversions since 2010 due to active tenant remixing and asset enhancements. Net property yield is estimated at c. 6.7% (5% initially), whilst capital values have risen 12% since acquisition to MYR730m as at Jun 2012. The injection would add 1.7sen to our FY14 DPU forecast, assuming: 1) a cap rate of 6.0%; and 2) >80% of the acquisition is equity-funded.

Source/Extract/Excerpts/来源/转贴/摘录: Maybank Kim Eng Research
Publish date: 17/04/13

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