CapitaLand Malaysia Mall Trust - Subdue 1HFY18 Earnings

Date: 26/07/2018

Source  :  MIDF
Stock  :  CMMT       Price Target  :  1.11      |      Price Call  :  HOLD
        Last Price  :  1.05      |      Upside/Downside  :  +0.06 (5.71%)


  • 1HFY18 earnings largely within estimates
  • 2QFY18 CNI fell by 16% as revenue declined by 5%
  • Better second half expected
  • Maintain NEUTRAL with unchanged TP of RM1.11

1HFY18 earnings largely within estimates. CapitaLand Malaysia Mall Trust’s (CMMT) 1HFY18 core net income (CNI) of RM70.7m was largely in-line with our full year expectation, making up 44.4% of our full year forecast and 44.9% of consensus’. A DPU of 2.0 was announced, which is also within our estimates.

2QFY18 CNI fell by 16% as revenue declined by 5%. The lower NPI from CMMT’s Klang Valley assets and higher operating expneses dampened 2QFY18’s core net income (CNI). Lower gross revenue was registered for the 3 Damansara property (previously Tropicana City) (- 9.4%), Sungei Wang Plaza (SWP) (-30.3%) and The Mines (-9.7%) compared with the previous corresponding year. The lower revenue is attributed to the portfolio occupancy rate that is lower at 91.7% compared to 93.7% in 1QFY18. Operating expenses that increased by 6.2% yoy are mainly due to higher assessment fees for the properties and marketing expenses for the renaming of 3 Damansara. Finance costs also increased as average cost of debt came in at 4.47% vs 4.44% qoq.

Portfolio rental reversion improved marginally at +0.3% yoy. For 1HFY18 rental reversion was positive for Gurney Plaza (+4.6%) and East Coast Mall (+1.8%). All the Klang Valley assets recorded negative rental reversion with SWP at -12.0%, The Mines at -5.0%, 3 Damansara mall at -4.0% and the office tower at -5.1%.

Better second half expected as we expect occupancy rates to improve due to completion of refurbishment at the 3 Damansara mall and new tenants that are scheduled to move into the office tower next month. We also expect better occupancy rate at The Mines following the completion of the asset enhancement initiative there, which is expected to be completed by year-end. This is also accompanied by the removal of overhang before the 14th General Election and also the GST free period from now until end-August. Coupled with improving consumer sentiment, the year-end holiday, sales and festive season, we expect shopper traffic and footfall to improve in 2HFY18.

Maintain NEUTRAL with unchanged TP of RM1.11. We make no changes to our earnings assumption CMMT’s earnings were broadly within expectation. The TP is based on DDM valuation (required rate of return: 8.8%, perpetual growth rate: 1.2%). We maintain our Neutral stance on CMMT due to the unexciting earnings in the near-term.

Source: MIDF Research - 26 Jul 2018

Share this
Labels: CMMT

Related Stocks

Chart Stock Name Last Change Volume 
CMMT 1.05 0.00 (0.00%) 70,400 

  Be the first to like this.


413  296  522  772 

Top 10 Active Counters
 KNM 0.455+0.01 
 PUC 0.0550.00 
 MTAG 0.51+0.025 
 SAPNRG 0.27-0.005 
 ARMADA 0.445+0.005 
 MYEG 1.26+0.01 
 GPACKET-WB 0.325+0.005 
 KNM-WB 0.185+0.005 
 HSI-C7F 0.335-0.035 
 HSI-H8B 0.205+0.02 


1. To Mr Koon Yew Yin: Why You Should NOT Miss MTAG? MTAG
2. 【5G Related】Another Telco Tower Benefits from 5G – ROHAS TECNIC BHD 【5G Related】Another Telco Tower Benefits from 5G – ROHAS TECNIC BHD
3. Margin call is not a bad thing to have - Koon Yew Yin Koon Yew Yin's Blog
4. Malaysia Stock Analysis – Perdana (7108) Louis Yap Investment
5. 探预算案催化领域·布局年杪橱窗粉饰·7大首选股可脱颖而出 星洲日報/投資致富‧企業故事
7. 《《 政府在预算案中大力推动e-wallet,那相关e-wallet龙头是否有受惠呢 》》 StockBuddy
8. Retail Strategy - Budget 2020 Stimuli to Drive 4Q Interest HLBank Research Highlights
Partners & Brokers