KUALA LUMPUR (Jan 31): Analysts expect forward earnings growth on CapitaLand Malaysia Trust (CLMT) to be mainly backed by positive rental reversions and stable occupancy rates.

According to TA Securities, CLMT achieved a 24% year-on-year (y-o-y) increase in realised net profit, reaching RM111.2 million, excluding fair value gains on investment properties.

This performance aligns well with analysts' expectations, meeting 101% and 105% of TA Securities and consensus full-year forecasts, respectively.

“In the fiscal year of 2023 (FY2023), distribution per unit (DPU) has increased 4% y-o-y to 4.2 sen, primarily attributed to a 24% increase in the weighted average number of units following a private placement exercise,” according to TA Securities.

“This translates into an attractive dividend yield of 7.3%, net property income (NPI) also rose significantly by 43% to RM217.4 million, boosted by contributions from Queensbay Mall and Valdor Logistics Hub, alongside improved revenues from other malls in CLMT's portfolio,” it said.

Despite these successes, the trust also faced challenges, such as 82% y-o-y jump in finance costs due to increased borrowings and higher average cost of debt (4.07% in FY 2023, compared to 3.24% in FY2022), highlighted by TA Securities.

“We maintain our 'buy' call on CLMT with a target price of 68 sen (from 63 sen), based on the CLMT’s valuation at a lower target yield of 7% (previously 7.25%),” it said.

Meanwhile, Maybank Investment Bank (Maybank IB) Research maintained its 'hold' rating with a higher target price of 59 sen (previously 56 sen) on CLMT, noting that the trust’s fourth-quarter results were in line with expectations.

Maybank IB said CLMT declared the final gross DPU for FY2023 at 4.17 sen, adjusted its FY2024/2025 earnings forecasts and raised its target price slightly, reflecting the trust’s steady growth backed by new asset contributions and positive rental reversions.

Separately, Kenanga Research echoed a similar sentiment which maintains its 'market perform' rating but with a slightly increased target price of 58 sen (from 53 sen).

For Kenanga Research, CLMT’s FY2023 core net profit and DPU exceeded its expectations, with a final DPU of 1.09 sen (full-year FY2023: 4.17 sen) also surpassing its forecast of 3.9 sen for FY2023, due to better-than-expected occupancy and rental revenue.

Kenanga Research also highlighted CLMT’s resilient earnings amid a competitive market, particularly in Klang Valley and its strategic diversification into the industrial and logistics sector.

At the time of writing, CLMT shares were up 1.5 sen or 2.63% to 58.5 sen, market capitalisation stood at RM1.62 billion.