FW: SG: CapitaLand Mall Trust - Transformation of Funan begins!
Ye Tian (James)
25 Jul 2016
CAPITALAND MALL TRUST | HOLD
Transformation of Funan begins!
- 2Q16 DPU grew 1.1% YoY
- Resilient footfall and tenants’ sales
- Rental reversions remain soft
CapitaLand Mall Trust (CMT) reported a 7.1% and 1.1% YoY increase in its 2Q16 gross revenue and DPU to S$170.9m and 2.74 S cents, respectively.
Results were in-line with our expectations. CMT showcased its resilience by recording shopper traffic and tenants’ sales psf per month in 1H16. Occupancy at its malls was also stable at 97.9% (+0.2 ppt QoQ). However, rental reversions remained soft, coming
in at 1.7% for 1H16 (1Q16: 1.4%; FY15: 3.7%). Management shared more details on its Funan redevelopment projection, which is estimated to cost S$560m and will comprise three components: retail, office and serviced residences. The projected ROI is 6.5%. We
lower our FY16 and FY17 DPU forecasts by 1.6% and 4.4%, respectively, as we factor in the Funan redevelopment in our assumptions. However, our fair value estimate increases from S$2.10 to S$2.23, as our dividend discount model also captures the income from
the completed asset in FY20, coupled with a lower risk-free rate of 2.4% (previously 3.0%) applied. Maintain
HOLD.
(Please see attached file: CMT-160725-OIR.pdf)
Andy Wong Teck Ching, CFA
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