CMMT’s MYR39.8m 3Q15 core profit came in line with our and consensus estimates. Maintain NEUTRAL with DDM-based MYR1.47 TP (5.3% upside). We continue to believe the recently acquired Tropicana City property and increased contribution from East Coast Mall should sustain its earnings growth going forward. Additionally, dividend yield remains decent at above 6% FY16F.

Within expectations. CapitaMalls Malaysia Trust (CMMT) recorded a 3Q15 core profit of MYR39.8m (+8.9% QoQ, +11.4% YoY). This brings 9M15 core profit to MYR114.6m, in line with our/consensus estimates. A dividend of 2.08 sen was also declared for the quarter. Earnings for the quarter were mainly underpinned by the maiden contribution from the recently acquired Tropicana City Mall (TCM) and Tropicana Office Tower(TCT) (collectively known as Tropicana City property), stable rental reversions from its Gurney Plaza and The Mines malls as well as a higher contribution from East Coast Mall (ECM) post its asset enhancement works. Overall rental reversions for 3Q15 stand at 2.3% while its portfolio occupancy rate remains stable at 95.7%.

Latest update. Management reiterated its view that retail sales outlook will remain challenging due to the recent weakness in MYR. This is expected to affect consumers’ purchasing power due to the higher costs of import goods. That said, management is confident that the REIT’s performance will remain stable due to its portfolio of strategically located malls which focuses largely on day-to-day necessity. Management also shared that TCM’s tenant mix adjustment exercise is progressing well.We mentioned in our previous report: CapitaMalls Malaysia Trust : Expecting a Better 2H15, the REIT is currently in the midst of installing a few fresh addition to the mall. As such, the REIT expects income contribution coming from TCM to grow upon its next tenancy renewal cycle. Tropicana City property currently contributes about 13% of the REIT’s total revenue. Additionally, management also recently launched CAPITASTAR which is now available at Gurney Plaza. CAPITASTAR is a multi-mall, multi-store card-less rewards programme to further enhance shopping experience and help drive tenants’ sales. The rewards programme will be rolled out to the rest of the malls soon.

Maintain NEUTRAL. We maintain our earnings forecasts, NEUTRAL call and DDM-based TP of MYR1.47 (5.3% upside). Although the outlook remains challenging for CMMT, we expect earnings to remain stable throughout the year. Its dividend yield also remains decent, at above 6%.