CapitaMalls Malaysia half-year results in line with expectations

CapitaMalls Malaysia Trust
(July 20, RM1.36)
Upgrade to buy with an unchanged target price of RM1.66: CapitaMalls Malaysia Trust’s (CMMT) core net income (CNI) of RM74.8 million for the first half of financial year 2015 (1HFY15) met expectations, as it makes up 51% and 46% of our and consensus full-year FY15 estimates of RM147.5 million and RM162.6 million, respectively.

CMMT announced distribution per unit (DPU) totalling 4.61 sen, comprising a half-yearly dividend of 4.43 sen and an advance DPU of 0.18 sen for the period from July 1, 2015 to July 8, 2015, following the placement of new CMMT units.

CMMT’s revenue for the second quarter of FY15 grew 2% year-on-year (y-o-y) to RM79.6 million, contributed by higher revenue from The Mines, East Coast Mall (ECM) and Gurney Plaza, which had more than offset its lower revenue from Sungei Wang Plaza (SWP).

ECM continues as the star performer, with revenue growth of 26.5% y-o-y to RM13.3 million, following the completion of asset enhancement works, which created an additional 45,000 sq ft of retail space for ECM.

However, SWP continues to be affected by the ongoing MRT works.

Growth in CNI was flat at 0% y-o-y, as higher finance cost neutralised the group’s 2% y-o-y growth in revenue. 

The occupancy rate (OR) of CMMT’s portfolio is maintained at 97.5%. ECM has the highest OR at 99.7%, followed by The Mines (97.5%), Gurney Plaza (97.5%) and SWP (95%).

Following the acquisition of Tropicana City Mall and Office, our FY15 OR is forecast to remain healthy at 96.4%, albeit slightly lower than currently due to TC Mall having an OR of 87.5%, based on the transitionary period of tenancy agreements following the change of owner.

We have increased our FY15 CNI forecast by 10% to RM161.7 million, after including the acquisition of TCM and Tropicana Office Tower, which is expected to contribute in 2HFY15.

We have also increased the unit base assumption by 7% to 1.9 billion units due to the recent private placement. 

Following that, we have increased our net DPU forecast for FY15 by 3% to 8.13 sen. As for FY16, our net DPU remains unchanged at 8.3 sen as the 13% CNI increase is neutralised by the similar 13% increase in units.

This article first appeared in The Edge Financial Daily, on July 21, 2015.