▊ CapitaMall Trust (CMT) has just announced its 4Q13 results, posting yoy growth of 6.9% in revenue and 14.9% in DPU. Its full-year earnings were in line with our estimate, while revenue was just 2% higher and DPU was spot-on. The higher NPI was mainly attributed to the various completed AEIs. We marginally lift our FY14-15 DPS estimates, but maintain our Hold rating, with an unchanged DDM-based (discount rate: 7.4%) target price of S$2.06, pending more impactful catalysts.
During the year, gross revenue increased by 10.2% to S$729.2m while NPI rose to S$502.7m (+12.9%). The stronger earnings were mainly on the back of higher MPI contributions from the completed AEIs at JCube, Bugis+ and The Atrium@Orchard, albeit slightly offset by a lower NPI due to the Bugis Junction AEI and higher operating expenses at Westgate. During the year, CMT achieved a positive rental reversion of 6.3% across the portfolio, in line with the reversion achieved on a yearly basis since FY10. Portfolio occupancy continues to remain robust at 98.5% (99.7% if Westgate is excluded), while full-year sales growth slowed to 2.5% yoy.
Continue to be driven by AEI
For FY14, we expect additional contribution from the completed Phase 1 of Bugis Junction AEI and the opening of Westgate with a pre-committed occupancy of 90% (as at 31 Dec 2013). CMT will continue to focus on the AEI of Tampines Mall and Phase 2 of Bugis Junction, which are projected to be completed in 4Q15 and 3Q14, respectively. In addition, we expect the sale of the Westgate office tower to be concluded only in 4Q14, upon the full completion of the development.
Valuation and catalysts
With a gearing ratio of 35.3%, CMT has headroom to increase its debt by c.S$475m (assuming a gearing of 40%) to fund future acquisitions. It currently trades at 6.1% FY15 dividend yield and P/BV of 1.1x. Potential re-rating catalysts include yield-accretive new acquisitions and positive surprises in retail sale. We maintain our Hold rating, with an unchanged DDM-based target price of S$2.06
Publish date: 23/01/14