Monday, October 28, 2013

CapitaMall Trust: Another quarter of value creation (OCBC)

CapitaMall Trust:
Fair value S$2.35
add: 12m dividend forecast S$0.100
versus: Current price S$2.00

Another quarter of value creation
• 3Q13 DPU up 5.8% YoY
• AEI works on track for completion
• Strong retail leasing demand

CapitaMall Trust’s (CMT) 3Q13 DPU came in at 2.56 S cents, up 5.8% YoY. This is in line with our expectations, as 9M13 DPU has met 75.1% of FY13 distribution forecast.
Management noted that its tenants’ sales increased by 2.8% YoY for 9M13, while its shopper traffic grew by 4.0%. Positive rental reversion of 6.3% was also achieved for the 528 leases renewed over the period. CMT updated that it has received strong leasing at Bugis Junction, and over 95% of new retail space has been pre-committed for Phase 1 AEI. In addition, CMT announced a new AEI at Tampines Mall in 3Q, which is expected to start in 1Q14. As CMT looks set to meet our forecasts, we keep our projections intact. Maintain BUY and S$2.35 fair value on CMT.

3Q13 performance within view
CapitaMall Trust (CMT) turned in a firm set of 3Q13 results last evening. NPI grew by 12.9% YoY to S$126.5m, driven chiefly by The Atrium@Orchard following the completion of asset enhancement initiatives (AEI) in Oct 2012. All other malls, we note, also contributed positively during the quarter due to higher secured rentals, except for Bugis Junction which recorded lower contribution as a result of ongoing refurbishment works since Apr. While CMT had to pay a 9.31% premium on its outstanding convertible bonds due in Jul, it benefited from lower finance expenses and released S$8.5m taxable income retained in 1H13. This boosted the distributable income up by 9.7% to S$88.8m, and DPU up by 5.8% to 2.56 S cents. Hence, 9M13 DPU tallied 7.55 S cents, representing a robust growth of 6.3%. This is in line with our expectations, given that the DPU has met 75.1% of FY13 distribution forecast (consensus: 73.3%).

Steady operational metrics
Management noted that its tenants’ sales increased by 2.8% for 9M13, while its shopper traffic grew by 4.0%. Positive rental reversion of 6.3% was also achieved for the 528 leases renewed over the period, roughly consistent with growth of 6.4% attained in 1H. As at 30 Sep, portfolio occupancy stood at 99.5%, slightly higher than 99.1% level seen in 2Q. CMT updated that it has received strong leasing at Bugis Junction, and over 95% of new retail space has been pre-committed for Phase 1 AEI. With the refurbishment works on track for completion in 4Q (Phase 2 to commence in 1Q14), we expect CMT’s portfolio performance to remain sturdy.

New AEI at Tampines Mall
CMT also announced a new AEI at Tampines Mall in 3Q, gelling well with the lease expiry at the mall (23.3% by mall income). Enhancement works are expected to start in 1Q14, and involve increasing its NLA, reconfiguring its retail units and rejuvenating its facade. CMT guided a capex of S$36.0m and an ROI of 8.0% on the project. As CMT looks set to meet our forecasts, we keep our projections intact. Maintain BUY and S$2.35 fair value on CMT.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 24/10/13

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