CapitaLand Malaysia Trust positive on outlook amid increased tourist spending, occupancy rates

• "This resilience is partly due to increased disposable income from EPF Account Three withdrawals, which has helped mitigate some living cost pressures,” said Tan Choon Siang, the chief executive officer of the trust's manager, CapitaLand Malaysia REIT Management Sdn Bhd.

KUALA LUMPUR (July 24): CapitaLand Malaysia Trust (KL:CLMT) said it is positive on its earnings outlook for this year, supported by sustained domestic earnings, an uptick in tourist arrivals and better occupancy rates for its retail malls.

“If you look at the retail sales for the first half of this year, they remained quite strong. While many are tightening their purse strings due to rising living costs, retail sales have stayed robust," said Tan Choon Siang, the chief executive officer of the trust's manager, CapitaLand Malaysia REIT Management Sdn Bhd (CMRM).

"This resilience is partly due to increased disposable income from EPF Account Three withdrawals, which has helped mitigate some living cost pressures,” Tan said in a virtual briefing on Wednesday.

He noted that the tourism sector has also been a key driver of retail sales.

“Compared to last year, tourist numbers have significantly increased. The influx of tourist dollars has positively impacted mall sales, particularly in Kuala Lumpur and Penang, providing a boost to the retail sector and supporting CLMT's performance,” he said.

Tan said that another crucial factor contributing to CLMT's positive outlook is the rise in occupancy rates for its mall, which have improved compared to the previous year.

"In terms of financial performance, you can expect the higher occupancy rates will reflect in our numbers," Tan said.

The occupancy rates of CLMT's portfolio stood at 93.1% as at June 30, 2024, up from 88% a year ago. 

Assets under the portfolio include Gurney Plaza and Queensbay Mall in Penang; Sungei Wang Plaza in Kuala Lumpur; The Mines and 3 Damansara in Selangor; and East Coast Mall in Pahang.

Positive rental reversion seen for retail segment

Tan expects leases expiring this year to continue to fetch positive rental reversion, adding that they could potentially match the 8.7% rate achieved in the first half of this year.

“The rental reversion is likely to be consistent with the first half. That is a good reference for what the full year is like in terms of interpretations,” he said.

As of June 30, 2024, about 61.7% of leases expiring in 2024 have been renewed or are under an advanced stage of negotiations, he added.

CLMT’s net property income (NPI) for the second quarter ended June 2024 (2QFY2024) rose 15.2% year-on-year, lifted by higher gross rental income and other revenue in the quarter. Quarterly NPI rose to RM65.47 million, from RM56.83 million.

The trust declared a dividend per unit of 2.36 sen, up from 1.19 sen per unit a year ago.

Gross revenue rose 8.5% to RM113.65 million from RM104.76 million in 2QFY2023, as gross rental income increased 4.5% to RM88.45 million from RM84.62 million.

The sustained headline earnings performance, similarly to that seen in 1QFY2024, helped lift CLMT’s net property income for the first half of FY2024 by 34.7% year-on-year to RM129.45 million from RM96.07 million.

Gross revenue for the six months rose 23.1% to RM225.54 million, from RM183.24 million previously, as all revenue segment contributions rose, including car park income which saw strong improvement in the first quarter.

CLMT units closed unchanged at 65.5 sen on Wednesday, giving a market capitsalisation of RM1.86 billion.

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