CapitaLand Malaysia expects strong consumer spending to support growth momentum for remaining of FY2023

• The real estate investment trust (REIT) said it had initially expected last year's strong recovery to taper off this year considering that there were no more special Employees Provident Fund (EPF) withdrawals, and due to a higher cost of living which may dent consumers’ spending power.

KUALA LUMPUR (July 25): CapitaLand Malaysia Trust (CLMT) expects its earnings momentum to sustain in the second half of this year, bolstered by strong consumer spending and positive rental reversion coupled with contributions from newly acquired assets.

The real estate investment trust (REIT) said it had initially expected last year's strong recovery to taper off this year considering that there were no more special Employees Provident Fund (EPF) withdrawals, and due to a higher cost of living which may dent consumers’ spending power.

"Surprisingly, the data has not gone that way, as consumers’ spending for the first half (1H) of this year continues to be very strong. In fact, [the consumers’ spending] is higher than last year and way higher than what it was before the Covid-19 pandemic. Hence, we are optimistic for the remainder of this year,” said CLMT chief executive officer Tan Choon Siang.

Speaking in a virtual press conference on CLMT's financial performance for the second quarter ended June 30, 2023 (2QFY2023), Tan attributed the strong performance to the contributions from the newly acquired Queensbay Mall and Valdor Logistics Hub in Penang, as well as higher occupancy rate and rental income.

The REIT posted a 51.8% year-on-year (y-o-y) increase in net property income (NPI) to RM56.83 million, from RM37.43 million in 2QFY2022, while revenue expanded 53.3% to RM104.76 million from RM68.32 million.

The strong quarterly performance also lifted 1H NPI by 30.7% to RM96.1 million from RM73.5 million in 1HFY2022, while revenue improved 34.8% to RM183.2 million from RM135.9 million.

CLMT recognised first full quarter income from Queensbay Mall in the latest quarterly results. Queensbay Mall contributed RM27.57 million in revenue and RM19.41 million in NPI, accounting for 26.31% and 34.14% of the group's total revenue and NPI for 2QFY2023.

Meanwhile, its occupancy rate stood at 88% as at June 30, 2023, compared with 80.8% a year earlier.

On capital expenditure, Tan said CLMT will spend close to 1.5% of its total asset value which amounted to RM5 billion.

Tan also said the group is actively exploring yield-accretive investment opportunities in new asset classes in pursuit of inorganic growth, particularly industrial and logistics assets.

At market close on Tuesday (July 25), CLMT’s unit price closed up two sen or 3.85% at 54 sen, giving the REIT a market capitsalisation of RM1.46 billion.