CMMT  announced  the  proposed placement of up to  299.6m  new  units for  the  acquisition  of  Tropicana  City  assets.  Maintain  NEUTRAL,  with our  DDM-based  TP  revised  slightly  to  MYR1.48  (3%  downside),  after revising  our  future  DPU  forecasts  post-placement.  Overall,  we  expect the  impact  of  the  placement  to  be  earnings-neutral,  and  we  are maintaining our 2-3% annual DPU growth for now.

Proposed  placement  of  new  units.  CapitaMalls  Malaysia  Trust (CMMT) announced that it will be  issuing up to 299.6m new units in a placement  exercise  to  raise  funds  for the  acquisition  of  Tropicana  City Mall and Tropicana City Office Tower.  Of this, about 36.3%  of the new units  will be  placed  out to its  sponsor.  CMMT is  looking to  raise  up to MYR395.5m,  or  about  73%  of  the  MYR540m  acquisition  price,  for  the assets.  Note  that  in  our  previous  report  dated  27  Jan  (CapitaMalls Malaysia  Trust  :  Acquiring  Tropicana  City  Assets),  we  have  assumed that  the  acquisition  will  be  fully-funded  through  debt.  Management  is targeting  to  complete  the  placement  in  3Q15,  in  tandem  with  the completion of the asset acquisitions.

Neutral  impact  to  earnings.  We  are  not  too  surprised  by  the announcement, as we believe that management prefers to keep gearing at a manageable level of about 35% and below.  Overall,  the  impact to DPU  would  be  neutral  –  although  DPU  enhancement  is  now  slightly lower  than our  previous  forecasts.  That  said,  we  believe  that  DPU  will still grow at about 2-3% annually in FY15-17.

Forecasts.  Our  DPU  forecasts  are  changed  by  less  than  5%  as  the dilution  from  the  enlarged  unit  base  has  been 

Maintain NEUTRAL. We are maintaining our NEUTRAL call on CMMT, with  our  DDM-based  TP revised  slightly  to  MYR1.48  (from  MYR1.52) after our earnings revision. We believe that, at this juncture,  most of the positives from this acquisition have  already been priced in. That said, its dividend yield is still decent, at around 6%.

Source: RHB