Tuesday, February 4, 2014

CapitaMall Trust: Possibly another year of AEI (OCBC)

CapitaMall Trust:
Fair value S$2.20
add: 12m dividend forecast S$0.113
versus: Current price S$1.89

Possibly another year of AEI

CapitaMall Trust (CMT) yesterday reported 4Q13 DPU of 10.27 S cents (+8.6%, in line with our expectations. As at 31 Dec 2013, portfolio occupancy remained relatively stable at 98.5%. For the year, tenant sales psf increased by 2.5%, while shopper traffic grew 3.1%. Going forward, we believe shopper traffic may improve further at several of CMT’s malls, which should sustain the leasing demand currently seen in its portfolio. We also understand that CMT will be embarking on AEI for Tampines Mall and Phase 2 of Bugis Junction in 1Q14. On 3 Jan, CMT has granted options to a consortium to purchase Westgate Tower for S$579.4m. If the sale materializes, the progressive payments made for the office building will provide CMT with additional resources for its growth plans. We maintain BUY on CMT but revise our fair value from S$2.35 to S$2.20 to reflect higher cost of equity assumptions.


Ending FY13 on positive note
CapitaMall Trust (CMT) yesterday reported 4Q13 NPI of S$125.5m and distributable income of S$94.4m, up 11.1% and 18.3% YoY respectively. The strong performance was bolstered by The Atrium@Orchard and IMM Building post asset enhancement initiatives (AEIs) and higher secured rentals on lease renewals. DPU came in at 2.72 S cents, representing an increase of 15.3% YoY. For FY13, DPU amounted to 10.27 S cents, up 8.6%.This is in line with both ours and consensus full-year DPU forecast of 10.1 S cents.

Positive operational performance
As at 31 Dec 2013, portfolio occupancy remained relatively stable at 98.5% as compared to 99.5% seen a quarter ago. The slight decline, we note, was mainly due to the inclusion of Westgate mall, which opened on 2 Dec 2013 with a committed occupancy of 85.8%. For the year, operational performance was largely positive, as evidenced by the positive rental reversion of 6.3% achieved for the 629 new leases/renewals. Moreover, tenant sales psf also increased by 2.5%, while shopper traffic grew 3.1%.

Maintain BUY
Going forward, we believe shopper traffic may improve further at several of CMT’s malls (especially those after completion of development/AEIs), which should sustain the leasing demand currently seen in its portfolio. Management shared that it is seeing a trend of retailers taking up smaller space and that it has tailoring the mall space to make it accessible for them. We think this is positive for CMT as it may command higher rental rates on a psf basis. We also understand that CMT will be embarking on AEI for Tampines Mall and Phase 2 of Bugis Junction to optimise its floor area and yield in 1Q14. On 3 Jan, CMT has granted options to a consortium to purchase Westgate Tower for S$579.4m (up to 24 Jan to exercise options). If the sale materializes, the progressive payments made for the office building will provide CMT with additional resources for its growth plans. We maintain BUY on CMT but revise our fair value from S$2.35 to S$2.20 to reflect higher cost of equity assumptions.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 23/01/14

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