CapitaMalls 2Q financial result in line with analysts' expectations

KUALA LUMPUR (July 20): CapitaMalls Malaysia Trust (CMMT) did not spring much surprise in its second quarter financial result, said analysts.

For the second quarter ended June 30, CMMT’s distributable income was marginally lower at RM38.78 million, down 1.2% from RM39.25 million.

Revenue rose slightly to RM79.62 million during the quarter under review from RM78.22 million in the previous corresponding quarter.

The shopping mall trust declared its first interim dividend of 4.61 sen, comprising a half-yearly dividend of 4.43 sen and an advance distribution per unit of 0.18 sen.

However, the interim dividend did not spur much interest in the stock. As at 4pm, CMMT was trading unchanged at RM1.36, with a market capitalisation of RM2.75 billion. The stock has rebounded from its recent low of RM1.29.

The contribution from East Coast Mall and higher rental reversions on all assets except for Sungei Wang Plaza helped to sustain its rental income.

In a research report today, CIMB Research’s Azman Hussin said CMMT’s 1HFY15 core net profit of RM74.8 million accounted for 47.3% of his full-year forecast and 51.6% of consensus estimates. CMMT’s distributable income for 1HFY15 fell 2.05% to RM78.81 million, from RM80.46 million in 1HFY14, backed by a revenue of RM160.6 million, rose 2% from RM157.2 million.

“We consider this broadly in line, as we expect a stronger 2HFY15 due to the contribution from Tropicana City Mall (TCM) and Tropicana City Office Tower (TCOT) in 3QFY15 onwards,” he explained.

CIMB Research maintained its Hold call and a target price of RM1.54 for CMMT. Meanwhile, MIDF Research upgraded the shopping mall real estate investment trust (REIT) to a Buy call with an unchanged target price of RM1.66. The research house said that the market has underappreciated the earnings contribution from the acquisition of TCM and TCOT over the longer term and potential recovery in Sungei Wang Plaza occupancy rate from FY17 onwards.

MIDF Research also noted that CMMT’s 2% growth in revenue, had more than able to offset weaker performance in Sungei Wang. “East Coast Mall (ECM) continues as the star performer with a revenue growth of 26.5% year-on-year to RM13.3 million following the completion of asset enhancement works which created additional 45,000 sq ft of retail space for ECM. However, Sungei Wang continues to be affected by the ongoing Mass Rapid Transit (MRT) works,” MIDF said.

According to data compiled by Hong Leong Investment Bank (HLIB) Research, Sungei Wang has seen its occupancy rate fell to 94.7% as at 2QFY15, lowest since 2011 when the occupancy rate stood at 98.2%. “We reiterate our views that Sungei Wang Plaza will remain a laggard for CMMT until Klang Valley MRT works completes in 2017,” the research house’s analyst Abdul Hadi Manaf said.