CapitaMall Trust (CMT) reported its 3Q14 results which were in-line with ours and the street’s expectations. Gross revenue increased 2.9% YoY to S$164.6m, while DPU grew at a stronger 6.2% to 2.72 S cents. We expect S$11.2m, or 0.32 S cents/unit of taxable income retained in 1H14 to be distributed in 4Q14. Despite softness in its shopper traffic and tenants’ sales psf, we note that the magnitude of decline has moderated, while portfolio occupancy rate was stable at 98.5%. Positive rental reversions of 6.3% were also achieved for 9M14. We retain our forecasts given this in-line set of results. CMT is trading at 5.7% FY14F and 6.0% FY15F distribution yield, above its 10-year average blended 12-month forward distribution yield of 5.3%. Maintain BUY, with an unchanged fair value estimate of S$2.20. This implies total potential returns of 21%.
3Q14 results within expectations
CapitaMall Trust (CMT) reported its 3Q14 results which were in-line with ours and the street’s expectations. Gross revenue increased 2.9% YoY to S$164.6m, underpinned largely by the completion of the AEIs at Bugis Junction in Oct 2013 and Sep 2014, coupled with higher rentals on new and renewed leases. DPU grew at a stronger 6.2% YoY to 2.72 S cents (ex-dividend on 24 Oct), partly due to a +0.3 ppt increase in its NPI margin to 69.3%. For 9M14, revenue rose 3.7% to S$493.6m, while DPU climbed 5.7% to 7.98 S cents. This constituted 74.9% and 72.6% of our FY14 forecasts, respectively. The latter is within expectations as S$11.2m, or 0.32 S cents/unit of taxable income retained in 1H14 is expected to be distributed in 4Q14.
Softness in retail scene; but portfolio still resilient
CMT recorded a 1.5% and 3.0% YoY decline in its shopper traffic and tenants’ sales psf in 9M14, respectively, in-line with the softness in Singapore’s retail sales. Nevertheless, we note that the magnitude of decline has moderated (shopper traffic and tenants’ sales psf were down 2.0% and 3.7% in 1H14, respectively). Its portfolio occupancy rate was also stable at 98.5% as at end Sep 2014, versus 98.6% as at end 1H14 and 98.5% as at end Dec 2013. CMT managed to achieve positive rental reversions of 6.3% for 9M14, despite a slight drag coming from IMM (-2.8%). We expect the situation to improve at IMM, as management plans to carry out Phase 2 of AEIs to incorporate more outlet stores. Three other malls are also undergoing AEIs at the moment.
Maintain BUY
In terms of financial position, CMT has maintained a comfortable gearing ratio of 34.1%, with an average cost of debt of 3.6%. We retain our forecasts given this in-line set of results. CMT is trading at 5.7% FY14F and 6.0% FY15F distribution yield, above its 10-year average blended 12-month forward distribution yield of 5.3%. Maintain BUY, with an unchanged fair value estimate of S$2.20. This implies total potential returns of 21%.
CapitaMall Trust (CMT) reported its 3Q14 results which were in-line with ours and the street’s expectations. Gross revenue increased 2.9% YoY to S$164.6m, underpinned largely by the completion of the AEIs at Bugis Junction in Oct 2013 and Sep 2014, coupled with higher rentals on new and renewed leases. DPU grew at a stronger 6.2% YoY to 2.72 S cents (ex-dividend on 24 Oct), partly due to a +0.3 ppt increase in its NPI margin to 69.3%. For 9M14, revenue rose 3.7% to S$493.6m, while DPU climbed 5.7% to 7.98 S cents. This constituted 74.9% and 72.6% of our FY14 forecasts, respectively. The latter is within expectations as S$11.2m, or 0.32 S cents/unit of taxable income retained in 1H14 is expected to be distributed in 4Q14.
Softness in retail scene; but portfolio still resilient
CMT recorded a 1.5% and 3.0% YoY decline in its shopper traffic and tenants’ sales psf in 9M14, respectively, in-line with the softness in Singapore’s retail sales. Nevertheless, we note that the magnitude of decline has moderated (shopper traffic and tenants’ sales psf were down 2.0% and 3.7% in 1H14, respectively). Its portfolio occupancy rate was also stable at 98.5% as at end Sep 2014, versus 98.6% as at end 1H14 and 98.5% as at end Dec 2013. CMT managed to achieve positive rental reversions of 6.3% for 9M14, despite a slight drag coming from IMM (-2.8%). We expect the situation to improve at IMM, as management plans to carry out Phase 2 of AEIs to incorporate more outlet stores. Three other malls are also undergoing AEIs at the moment.
Maintain BUY
In terms of financial position, CMT has maintained a comfortable gearing ratio of 34.1%, with an average cost of debt of 3.6%. We retain our forecasts given this in-line set of results. CMT is trading at 5.7% FY14F and 6.0% FY15F distribution yield, above its 10-year average blended 12-month forward distribution yield of 5.3%. Maintain BUY, with an unchanged fair value estimate of S$2.20. This implies total potential returns of 21%.
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