Stock Name: CMMT
Company Name: CAPITAMALLS MALAYSIA TRUST
Research House: AMMB
CapitaMalls Malaysia Trust
(April 19, RM1.13)
Maintain buy at RM1.12 with revised fair value RM1.26 (from RM1.22): We reaffirm our 'buy' rating on CapitaMalls Malaysia Trust (CMMT) with our fair value raised to RM1.26 from RM1.22 previously. We arrive at our fair value after tagging a 10% discount to our revised discounted cash flow value of RM1.40 ' to incorporate the Gurney Plaza extension.
At our fair value, the REIT offers an attractive yield of 6.7% and a 260-basis point spread over the 10-year Malaysian Government Securities (MGS) yield of 4.1%.
CMMT's 1QFY11 net income came in at RM31.4 million, largely in line with our and street estimates, covering 29% and 22%, respectively. CMMT'' declared a dividend of 1.7 sen per share for 1QFY11.
There is no year-on-year (y-o-y) comparison as CMMT was only listed in June 2010. But on a sequential basis, net income grew by 11% due to lower management costs.
We have raised our earnings for FY11F/12F by 14% to 15% to RM123 million and RM131 million respectively, as we incorporate an additional 140,000 sq ft (or +8%) into the portfolio following the recent injection of the Gurney Plaza extension. We are also introducing FY13F earnings at RM138 million, representing 5% y-o-y growth.
CMMT's portfolio remains healthy with the occupancy rate at almost 100%. We understand shopper traffic remains strong at 11.9 million in 1Q11, although this was a slight dip compared with 1Q10's 12.1 million ' possibly due to festive holidays during the period.
The portfolio also showed a positive rental reversion of 7.6%, mostly contributed by Gurney Plaza with rental reversion of +9.5%. Risks to dividend per unit are muted as circa 64% to 70% of its gross rental income for FY11F/13F has already been secured.
We remain a buyer of CMMT with our investment thesis centring around CMMT as a pure shopping mall play. This provides the best exposure to Malaysia's rising consumer affluence via an attractive portfolio of retail assets in the Klang Valley and Penang. Retail sales are expected to grow 3% to 5% over the next three years, supported by Malaysia's expected GDP growth of 4.5% to 5.5%.
CMMT is also backed by a reputable sponsor, CapitaMalls Asia (CMA), a specialist in mall REITs with a solid track record. CMA's extensive network, managing malls in India, China, Japan and Singapore, provides key knowledge and understanding of tenants' requirements. ' AmResearch, April 19
This article appeared in The Edge Financial Daily, April 20, 2011.
Company Name: CAPITAMALLS MALAYSIA TRUST
Research House: AMMB
CapitaMalls Malaysia Trust
(April 19, RM1.13)
Maintain buy at RM1.12 with revised fair value RM1.26 (from RM1.22): We reaffirm our 'buy' rating on CapitaMalls Malaysia Trust (CMMT) with our fair value raised to RM1.26 from RM1.22 previously. We arrive at our fair value after tagging a 10% discount to our revised discounted cash flow value of RM1.40 ' to incorporate the Gurney Plaza extension.
At our fair value, the REIT offers an attractive yield of 6.7% and a 260-basis point spread over the 10-year Malaysian Government Securities (MGS) yield of 4.1%.
CMMT's 1QFY11 net income came in at RM31.4 million, largely in line with our and street estimates, covering 29% and 22%, respectively. CMMT'' declared a dividend of 1.7 sen per share for 1QFY11.
There is no year-on-year (y-o-y) comparison as CMMT was only listed in June 2010. But on a sequential basis, net income grew by 11% due to lower management costs.
We have raised our earnings for FY11F/12F by 14% to 15% to RM123 million and RM131 million respectively, as we incorporate an additional 140,000 sq ft (or +8%) into the portfolio following the recent injection of the Gurney Plaza extension. We are also introducing FY13F earnings at RM138 million, representing 5% y-o-y growth.
CMMT's portfolio remains healthy with the occupancy rate at almost 100%. We understand shopper traffic remains strong at 11.9 million in 1Q11, although this was a slight dip compared with 1Q10's 12.1 million ' possibly due to festive holidays during the period.
The portfolio also showed a positive rental reversion of 7.6%, mostly contributed by Gurney Plaza with rental reversion of +9.5%. Risks to dividend per unit are muted as circa 64% to 70% of its gross rental income for FY11F/13F has already been secured.
We remain a buyer of CMMT with our investment thesis centring around CMMT as a pure shopping mall play. This provides the best exposure to Malaysia's rising consumer affluence via an attractive portfolio of retail assets in the Klang Valley and Penang. Retail sales are expected to grow 3% to 5% over the next three years, supported by Malaysia's expected GDP growth of 4.5% to 5.5%.
CMMT is also backed by a reputable sponsor, CapitaMalls Asia (CMA), a specialist in mall REITs with a solid track record. CMA's extensive network, managing malls in India, China, Japan and Singapore, provides key knowledge and understanding of tenants' requirements. ' AmResearch, April 19
This article appeared in The Edge Financial Daily, April 20, 2011.
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