CMMT (5180) - CapitaMalls Malaysia Trust - Short-term pain from Sg. Wang
Target RM1.54 (Stock Rating: HOLD)
CMMT's 1Q15 core net profit of RM38.2m was below our expectations, at only 23.3% of our FY15 forecast. The main variance was the weaker-than-expected revenue from Sg. Wang Plaza, which continues to be plagued by the MRT works in the surrounding area. We cut our FY15-17 DPS forecasts by 3.6-3.7% to account for the weaker revenue from Sg. Wang Plaza. Our DDM-based target price is also reduced from RM1.62 to RM1.54, with unchanged 8.1% cost of equity. Given that FY15 net profit is expected to be flattish and CMMT’s acquisition of Tropicana City Mall is only due to be completed by 3Q15, we maintain our Hold call on the stock.
1Q15 DPU of 2.25 sen
CMMT declared 1Q15 DPU of 2.25 sen, a 3% yoy decline. This was below our FY15 estimate of 9.7 sen, which we have now revised downwards to in line with our lower FY15 EPS forecast. Management highlighted that it expects FY15 DPU to be flattish.
1Q15 results review
Revenue rose 2.5% yoy in 1Q15, driven by higher rental rates achieved for new and renewed leases, as well as the full contribution from East Coast Mall, with the completion of its 2-year asset enhancement initiatives (AEI). East Coast Mall revenue increased 18.7% yoy in 1Q15. As for the rest of its portfolio, there was revenue growth across the board, with the exception of Sg. Wang Plaza. Sg Wang Plaza revenue declined 15% yoy due to the ongoing MRT works in that area. Both Gurney Plaza and The Mines posted 1Q15 revenue growth of 5.1% and 5.0% yoy, respectively. Net property income for the quarter rose 2.1% yoy, in line with revenue growth but partly offset by the 3.4% yoy increase in property operating expenses due to higher maintenance and staff costs.
Key highlights from conference call
More than 10 analysts dialled in for CMMT's 1Q15 conference call, which was chaired by its CEO, Low Peck Chen. The key highlights were as follows: 1) average rental reversions of 3.6% yoy in 1Q15, with Gurney Plaza and The Mines posting strong double-digit rental income growth of 10.2% and 10.7% yoy, respectively, 2) the acquisition of Tropicana City Mall is expected to be completed by 3Q15, and 3) CMMT plans for capex of RM30m-40m in FY15.
Source: CIMB Daybreak - 16 April 2015
Target RM1.54 (Stock Rating: HOLD)
CMMT's 1Q15 core net profit of RM38.2m was below our expectations, at only 23.3% of our FY15 forecast. The main variance was the weaker-than-expected revenue from Sg. Wang Plaza, which continues to be plagued by the MRT works in the surrounding area. We cut our FY15-17 DPS forecasts by 3.6-3.7% to account for the weaker revenue from Sg. Wang Plaza. Our DDM-based target price is also reduced from RM1.62 to RM1.54, with unchanged 8.1% cost of equity. Given that FY15 net profit is expected to be flattish and CMMT’s acquisition of Tropicana City Mall is only due to be completed by 3Q15, we maintain our Hold call on the stock.
1Q15 DPU of 2.25 sen
CMMT declared 1Q15 DPU of 2.25 sen, a 3% yoy decline. This was below our FY15 estimate of 9.7 sen, which we have now revised downwards to in line with our lower FY15 EPS forecast. Management highlighted that it expects FY15 DPU to be flattish.
1Q15 results review
Revenue rose 2.5% yoy in 1Q15, driven by higher rental rates achieved for new and renewed leases, as well as the full contribution from East Coast Mall, with the completion of its 2-year asset enhancement initiatives (AEI). East Coast Mall revenue increased 18.7% yoy in 1Q15. As for the rest of its portfolio, there was revenue growth across the board, with the exception of Sg. Wang Plaza. Sg Wang Plaza revenue declined 15% yoy due to the ongoing MRT works in that area. Both Gurney Plaza and The Mines posted 1Q15 revenue growth of 5.1% and 5.0% yoy, respectively. Net property income for the quarter rose 2.1% yoy, in line with revenue growth but partly offset by the 3.4% yoy increase in property operating expenses due to higher maintenance and staff costs.
Key highlights from conference call
More than 10 analysts dialled in for CMMT's 1Q15 conference call, which was chaired by its CEO, Low Peck Chen. The key highlights were as follows: 1) average rental reversions of 3.6% yoy in 1Q15, with Gurney Plaza and The Mines posting strong double-digit rental income growth of 10.2% and 10.7% yoy, respectively, 2) the acquisition of Tropicana City Mall is expected to be completed by 3Q15, and 3) CMMT plans for capex of RM30m-40m in FY15.
Source: CIMB Daybreak - 16 April 2015
