• We-reaffirm our HOLD recommendation on CapitaMalls Malaysia Trust (CMMT), with an unchanged fair value of RM2.00/unit, based on our DCF valuation.

• The corporate exercise in relation to the Proposed Authority to allot and issue up to 353.6mil new units, representing 20% of existing fund size of CMMT, has been approved by the Securities Commission.

• Pursuant to the Proposed Authority, the additional listing application to Bursa Securities for the listing and quotation for up to 353.6mil new units on the Main Market was submitted yesterday.

• Subject to the relevant authorities’ approval, the Proposed Authority will in turn give CMMT the flexibility to allot and issue new units at any time, without the need for convening a separate general meeting. This is a new regulation for the MREITs to conduct AGM for a general mandate to issue units.

• The Proposed Authority, however, does not imply new placement of units immediately. The issuance of new units can be used anytime, in the preceding 12 months, for the purpose of acquisition, working capital expenditure, or refinancing existing debt, so long as it does not exceed 20% of CMMT’s existing fund size.

• Nonetheless, we believe in a likelihood of an injection of Queensbay Mall, Penang, which is owned by its sponsor, CapitaMalls Asia (CMA).

• CMMT’s gearing is manageable and comfortable at 26%. Debt management wise, CMMT had recently issued a 4-year unrated and secured Medium Term Notes of RM300mil in December 2012.

• Taking all in, no change to our FY13F-FY15F estimates. Despite a strong sponsor backing and the present lack of confirmed acquisitions in the immediate- to near-term, we continue to like CMMT for its well-diversified portfolio mix and resilient income stream.

• Potential acquisitions will continue to centre on day-to-day necessity, shopping malls, in-line with CMMT’s current portfolio mix. In addition, CMA is developing a retail mall in Taman Melawati with Sime Darby.

Source: AmeSecurities