• We are ceasing coverage on CLMT due to a reallocation of internal resources. Our last call was NEUTRAL with a TP of MYR0.57.

• 9M23 results. The core profit of MYR77.1m (+20% YoY) was mostly driven by the newly acquired Queensbay Mall. On a same-store basis, rental income was 8.5% higher YoY in 9M23, but higher utility costs led to a 1.6% contraction in NPI. Portfolio occupancy was stable at 89.6%, but 3 Damansara’s improvement in occupancy rate (3Q23: 67.7%, 2Q23: 64.1%) came at the cost of -27% rental reversion. The REIT’s 9M23 DPU of 2.98 sen is only 0.7% higher YoY (9M22: 2.96 sen) due to the higher share base following the acquisition of Queensbay Mall.

• Ceasing coverage. Our most recent recommendation was NEUTRAL, with a TP of MYR0.57 based on our dividend-discount model (Ke: 8%). Our TP also incorporated a 2% ESG premium given its ESG score of 3.1. While the prospects for its three key malls – Gurney Plaza, Queensbay Mall, and East Coast Mall – are positive backed by strong occupancy rates (>98%), the outlook for its underperforming Klang Valley malls (occupancy rates <79%) are more challenging especially due to the intense competition in the area. Despite the acquisition of Queensbay Mall, the Klang Valley malls still make up a significant 31% of the REIT’s total assets under management.

Source: RHB Securities Research - 29 Dec 2023