Singapore | REITs
Asia Pacific Equity Research
CAPITALAND MALL TRUST | HOLD MARKET CAP: USD 5.2B
22 Oct 2015 Company Update
AVG DAILY TURNOVER: USD 13M
HAD A GOOD RUN, DOWNGRADE TO HOLD • • •
HOLD (downgrade) Fair value
S$2.09
add: 12m dividend forecast
3Q15 DPU rose 9.6% YoY Rental reversions continued to moderate Valuations no longer compelling
S$0.111 S$2.05
versus: Current price 12m total return forecast
3Q15 results in-line with expectations CapitaLand Mall Trust (CMT) reported its 3Q15 results which met our expectations. Although gross revenue fell slightly by 1.8% YoY to S$161.7m due to lower contributions from IMM, JCube and Clarke Quay, DPU rose 9.6% YoY to 2.98 S cents. This was driven by a higher NPI margin, lower finance costs, improved distribution from its JVs and associate, and the release of S$8m of taxable income which was retained in 1Q15. On a 9M15 basis, CMT’s gross revenue was lower by 1.0% to S$488.6m and formed 74.3% of our FY15 forecast. DPU of 8.37 S cents represented a positive growth of 4.9%, and constituted 75.2% of our full-year projection.
7%
Analysts Andy Wong Teck Ching, CFA (Lead) ● +65 6531 9817
[email protected] Eli Lee ● +65 6531 9112
[email protected] Key information Market cap. (m)
S$7,179 / USD5,160
Avg daily turnover (m)
S$18 / USD13
Avg daily vol. (m)
8.7
52-wk range (S$)
1.845 - 2.28
Free float (%)
Operations still steady, but rental reversions eased further Encouragingly, CMT’s 9M15 shopper traffic and tenants’ sales psf per month increased 4.2% and 4.4%, respectively, despite the soft economic environment. Overall portfolio occupancy improved slightly from 96.4% to 96.8%. However, rental reversions came in at 4.1% for the 9M15 period, as compared to the 4.6% and 6.1% figures achieved in 1H15 and 1Q15, respectively. This implied a continued moderation in CMT’s rental reversion trend in 3Q15. The main drag came once again from JCube, which saw its rental rates slide 14.1% as compared to its preceding rental rates. Downgrade to HOLD on valuation grounds We make some minor tweaks to our forecasts, as we take into account the recent proposed divestment of Rivervale Mall by CMT. Our fair value estimate is trimmed marginally from S$2.10 to S$2.09. Following our upgrade on CMT to a BUY on 15 Sep 2015, the stock has appreciated 9.6% to S$2.05, outperforming the 5.4% and 5.9% gains by the STI and FTSE ST REIT Index, respectively, during the same period. At current price level, we opine that the valuations of CMT are no longer compelling, with the stock trading at 5.4% FY15F and 5.5% FY16F distribution yield. This is approximately in-line with its 5-year average forward yield (versus +2 SD when we upgraded the stock in Sep). We thus downgrade CMT to HOLD.
64.0
Shares o/s. (m)
3,536.3
Exchange
SGX
BBRG ticker
CT SP
Reuters ticker
CMLT.SI
SGX code
C38U
GICS Sector
Financials
GICS Industry
REITs CapitaLand 29.2%
Top shareholder
Relative total return
1m
3m
Company (%)
8
-5
12m 10
STI-adjusted (%)
3
4
12
Price performance chart
Sources: Bloomberg, OIR estimates
Key financial highlights Year Ended 31 Dec (S$ m) Gross revenue Total property expenses
Industry-relative metrics FY13
FY14
FY15F
FY16F
637.6
658.9
657.6
716.5
-198.9
-210.5
-202.0
-217.9
Net property income
438.7
448.4
455.6
498.5
Distributable income to unitholders
356.2
375.3
383.9
402.1
10.3
10.8
11.1
11.4
na
na
11.0
11.8
DPU yield (%)
5.0
5.3
5.4
5.5
P/NAV (x)
1.2
1.1
1.1
1.2
ROE (%)
9.8
10.1
6.5
6.8
30.4
32.1
36.7
35.9
DPU per share (S cents) Cons. DPU (S cents)
Debt/Assets (%)
Note: Industry universe defined as companies under identical GICS classification listed on the same exchange. Sources: Bloomberg, OIR estimates
Please refer to important disclosures at the back of this document.
MCI (P) 005/06/2015
OCBC Investment Research Singapore Equities
Exhibit 1: Quarterly financial highlights 3Q14
3Q15
% Chg
2Q15
% Chg
(S$m)
(S$m)
(YoY)
(S$m)
(QoQ)
Gross revenue
164.6
161.7
-1.8%
159.6
1.3%
Property operating expenses
-50.5
-48.4
-4.3%
-50.1
-3.4%
Net property income
114.1
113.3
-0.7%
109.5
3.5%
Management fees
-10.5
-10.2
-2.6%
-10.1
1.0%
-0.8
-0.9
4.6%
-0.9
-3.2%
0.0
0.0
nm
0.0
nm -2.7%
Trust expenses Foreign exchange gain - realised Finance income Finance costs Share of profit of associate and joint venture Net income
2.8
2.7
-3.7%
2.8
-28.4
-23.7
-16.8%
-23.5
0.6%
22.8
20.1
-11.8%
11.2
80.2%
100.0
101.4
1.4%
88.9
14.0%
Loss on repurchase of convertible bonds
0.0
0.0
nm
0.0
nm
Net change in fair value of financial derivatives
1.2
0.0
-100.0%
0.0
nm
Change in fair value of investment properties
0.0
0.0
nm
53.2
-100.0%
Gain on divestment of investment property Total return for the year before income tax expense Income tax expense
0.1
0.0
nm
0.1
nm
101.3
101.4
0.1%
142.2
-28.7%
0.0
0.0
nm
0.0
nm
101.3
101.4
0.1%
142.2
-28.7%
-1.5
0.4
nm
5.0
-91.6%
0.0
0.0
nm
-53.2
-100.0%
99.8
101.8
2.0%
94.0
8.3%
0.0
0.0
nm
0.0
nm
Less: Other adjustments
-6.1
1.4
nm
0.0
nm
Distributable income to unitholders
93.7
103.2
10.2%
94.0
9.8%
Distributions per unit (S cents)
2.72
2.98
9.6%
2.71
10.0%
Total return for the year after income tax expense Non-tax deductible expenses, net and other adj. Change in fair value of investment properties Income available for distribution Less: Non-controlling interests
Source: REIT Manager
Exhibit 2: CMT's renewals achieved
Source: REIT Manager
2
OCBC Investment Research Singapore Equities
Exhibit 3: CMT's portfolio occupancy trend
Source: REIT Manager
Exhibit 4: CMT's portfolio lease expiry profile
Source: REIT Manager
3
OCBC Investment Research Singapore Equities
Company financial highlights
Income statement Year Ended 31 Dec (S$ m) Gross revenue Total property expenses Net property income Net finance costs Property management fees Other expenses Net income Total return for the period Adjustments Distributable income to unitholders
Balance sheet As at 31 Dec (S$ m) Investment properties Properties under development Cash Total current assets Total assets Current liabilities ex debt Debt Total liabilities Unitholders' funds Total equity and liabilities
Cash flow statement Year Ended 31 Dec (S$ m) Net income Adjustments Operating income before working cap chgs Change in working capital Cash generated from operating activities Cashflow from investing activities Cashflow from financing activities Change in cash Cash at beginning of period Cash at end of period
Key rates & ratios DPU per share (S cents) NAV per share (S cents) Adjusted P/E (x) P/NAV (x) NPI margin (%) Net income margin (%) Debt/Assets (%) DPU yield (%) ROE (%) ROA (%)
FY13
FY14
FY15F
FY16F
637.6 -198.9 438.7 -102.7 -39.0 100.5 397.6 574.4 -218.2 356.2
658.9 -210.5 448.4 -99.3 -41.7 144.6 452.0 618.9 -243.5 375.3
657.6 -202.0 455.6 -101.3 -41.4 77.8 390.7 408.9 -25.1 383.9
716.5 -217.9 498.5 -122.4 -45.1 79.2 410.2 429.8 -27.7 402.1
FY13
FY14
FY15F
FY16F
7,276.0 0.0 829.9 851.4 9,220.0 188.3 2,805.4 3,211.2 6,008.7 9,220.0
7,510.0 0.0 1,129.6 1,154.7 9,858.3 253.3 3,169.3 3,575.9 6,282.4 9,858.3
8,045.1 0.0 1,289.9 1,312.9 10,551.7 233.1 3,877.4 4,263.6 6,288.1 10,551.7
8,126.2 0.0 1,116.2 1,141.3 10,461.2 250.8 3,754.4 4,166.0 6,295.2 10,461.2
FY13
FY14
FY15F
FY16F
397.6 -0.3 397.3 18.2 415.5 -66.9 -626.9 -278.3 1,108.2 829.9
452.0 -48.5 403.5 5.2 408.7 50.6 -159.7 299.7 829.9 1,129.6
390.7 20.9 411.6 -18.3 393.3 -465.0 232.1 160.4 1,129.6 1,289.9
410.2 40.3 450.5 23.3 473.8 -8.9 -638.6 -173.7 1,289.9 1,116.2
FY13
FY14
FY15F
FY16F
10.3 173.7 18.4 1.2 68.8 62.4 30.4 5.0 9.8 6.0
10.8 181.5 15.7 1.1 68.1 68.6 32.1 5.3 10.1 6.5
11.1 181.6 18.8 1.1 69.3 59.4 36.7 5.4 6.5 4.0
11.4 177.9 18.3 1.2 69.6 57.3 35.9 5.5 6.8 4.1
Source: REIT Manager, OIR forecasts
Company financial highlights
OCBC Investment Research Singapore Equities
SHAREHOLDING DECLARATION: The analyst/analysts who wrote this report holds/hold NIL shares in the above security.
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Published by OCBC Investment Research Pte Ltd
Important disclosures
