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Rides on strong retail growth
Maintain Buy. CapitaMalls Malaysia Trust’s (CMMT) RM45.9m 2010 distributable income (which reflected 5½ months of earnings since listing on 16 July) was within expectations. We expect a stronger 2011 supported by better rental and occupancy rates driven by strong retail growth. The recent proposed acquisition of Gurney Plaza Extension (GPE) could boost DPU by another 3-5% (post-placement). Currently, CMMT offers 7.1% yield compared to 7.8% for M-REIT and 6.7% for SunREIT. Maintain forecasts and RM1.20 DDM-based TP.
Key highlights for 2010 results: 1) RM45.9m distributable income was derived after adjusting for RM17.9m non-cash items (see Table 2), 2) rental rate rose by an average 5% from Jan’10 to Dec’10 (+6.1% in Gurney Plaza, +2.8% Sungai Wang Plaza and +6.6% The Mines) with an average retention rate of 96%, 3) shopper and vehicular traffic have increased by 16% YoY and 2% YoY respectively, and 4) proposes 1.8 sen final DPU, lifting 2010 DPU to 3.4 sen (in line).
Buys GPE. CMMT has proposed to buy GPE for RM215m cash. GPE is a 9-storey retail extension block adjoining CMMT’s existing Gurney Plaza. Total cost (including acquisition and private placement expenses) is estimated at RM223.3m which will be funded via debt and RM167m new unit placement. CMMT Investment Limited (CMMTIL) which currently holds a 41.7% stake in CMMT has committed to underwrite additional unsubscribed placement unit under a book building exercise.
Pipeline assets. CapitaMalls Asia (CMA) has recently offered CMMT the first right to acquire Queensbay Mall (the largest mall in Penang) but it was rejected by CMMT due to an unattractive 5% property yield. Nevertheless, based on CMA’s strong track record in enhancing asset value, the mall could be yield accretive for CMMT later. CMA targets to improve Queensbay Mall’s property yield to 6.5%.
Maintain Buy. CapitaMalls Malaysia Trust’s (CMMT) RM45.9m 2010 distributable income (which reflected 5½ months of earnings since listing on 16 July) was within expectations. We expect a stronger 2011 supported by better rental and occupancy rates driven by strong retail growth. The recent proposed acquisition of Gurney Plaza Extension (GPE) could boost DPU by another 3-5% (post-placement). Currently, CMMT offers 7.1% yield compared to 7.8% for M-REIT and 6.7% for SunREIT. Maintain forecasts and RM1.20 DDM-based TP.
Key highlights for 2010 results: 1) RM45.9m distributable income was derived after adjusting for RM17.9m non-cash items (see Table 2), 2) rental rate rose by an average 5% from Jan’10 to Dec’10 (+6.1% in Gurney Plaza, +2.8% Sungai Wang Plaza and +6.6% The Mines) with an average retention rate of 96%, 3) shopper and vehicular traffic have increased by 16% YoY and 2% YoY respectively, and 4) proposes 1.8 sen final DPU, lifting 2010 DPU to 3.4 sen (in line).
Buys GPE. CMMT has proposed to buy GPE for RM215m cash. GPE is a 9-storey retail extension block adjoining CMMT’s existing Gurney Plaza. Total cost (including acquisition and private placement expenses) is estimated at RM223.3m which will be funded via debt and RM167m new unit placement. CMMT Investment Limited (CMMTIL) which currently holds a 41.7% stake in CMMT has committed to underwrite additional unsubscribed placement unit under a book building exercise.
Pipeline assets. CapitaMalls Asia (CMA) has recently offered CMMT the first right to acquire Queensbay Mall (the largest mall in Penang) but it was rejected by CMMT due to an unattractive 5% property yield. Nevertheless, based on CMA’s strong track record in enhancing asset value, the mall could be yield accretive for CMMT later. CMA targets to improve Queensbay Mall’s property yield to 6.5%.
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