CMMT’s  9MFY14  came  in  within  expectations  at  72/71%  of ours/consensus  estimates.  A  decent  DPU  of  2.12  sen  was  declared. Earnings growth continued  to be affected by Sg. Wang Plaza’s decline due  to  the  ongoing  MRT  construction  works.  We  note  that  CMMT’s upcoming change of guard on 1 Nov is unlikely to have an impact on future performance. Maintain NEUTRAL and DDM-based TP of MYR1.41.

Within  expectations.    CapitaMalls  Malaysia  Trust  (CMMT)’s  3QFY14 net profit of MYR35.7m (-5.2%  YoY;  -2.6%  QoQ),  brought  9MFY14 net profit  to  MYR110.6m  (+0.6%  YoY),  coming  in  at  72/71%  of ours/consensus  estimates.  A  dividend  of  2.12  sen  was  declared  this quarter, in line with forecast. Revenue growth was flattish in 3QFY14, as Sg. Wang Plaza’s earnings continued to be affected by the ongoing MRT construction  works.  Nonetheless,  average  YTD  rental  reversion continued  to  show  improvements,  inching  up  to  3.3%  in  3QFY14 (2Q14:  2.3%). Portfolio occupancy rate was stable at 97.9%.  Note that East Coast Mall’s Phase 2 refurbishments  is now almost at  its tail-end, and may start contribute positively as early as 4QFY14. 

Change  of  guard  on  1  Nov.    Recall  that  CMMT  had  announced  that Ms  Sharon  Lim  Hwee  Li  will  relinquish  her  role  as  Non-Independent Executive Director and  CEO  of the trust  due to personal reasons. She has  served  in  that  role  since  CMMT’s  inception.  Ms  Low  Peck  Chen, currently the deputy CEO, will take up the reins on 1 Nov upon Ms Lim’s departure.  Despite  investors’  concerns  on  the  change  of  guard,  we believe  that  CMMT’s  future  performance  is  unlikely  to  be  affected  as: i)  Ms Low has served in several finance-related positions since  CMMT’sinception;  and  ii)  Ms  Lim  will  be  facilitating  the  transition  to  the  new 
management until end-2014. 

Earnings  forecasts.  No  changes  to  our  FY14/15  forecasts.  We  have taken this opportunity to introduce our FY16 numbers.

Maintain NEUTRAL. We keep our  DDM-based TP at MYR1.41. Current net yield looks decent at about 6%.  CMMT’s earnings will  probably notsuffer  despite the  impending departure of Ms  Lim, and we are confident that it will maintain a DPU growth of about 4-5% p.a. going forward.

Source: RHB