CapitaMalls Malaysia Trust
(June 26, RM1.39) 
Maintain neutral with an unchanged target price of RM1.45:
CapitaMalls will raise RM395.5 million via equity placement for the acquisition of Tropicana City Mall and Tropicana Tower Office for a total acquisition cost of RM565 million. 

The shares will be placed out at RM1.32. The price for acquiring the properties is fairly valued taking into account the 90.8% occupancy rate for Tropicana City Mall, 100% for Tropicana Tower Office and the strategic location next to Lebuhraya Damansara Puchong.

Earnings of financial year 2015 estimate (FY15E) are slated to grow slower at 2.66% from FY14 results. 

The acquisition fee must be paid as soon as the deal is completed according to the trust deed. It is expected to be completed in the fourth quarter (4QFY15).

The placement will dilute earnings per unit (EPU) and dividend per unit (DPU) estimates for FY15 and FY16 due to the enlarged share base. The dilution of FY15E will impact core EPU and DPU negatively around 13% lower year-on-year (y-o-y) from FY14, dropping from 8.43 sen to 7.27 sen for core EPU and DPU from 8 sen to 6.83 sen. 

Total liabilities will increase 20.75% y-o-y for FY15E from FY14. The total liabilities will be expanded to reflect the debt of the remaining acquisition cost from RM1.1 billion to RM1.3 billion. — MIDF Research, June 26


This article first appeared in The Edge Financial Daily, on June 29, 2015. Subscribe here.

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