Research Houses Maintain "Buy Call" On Capitamalls Malaysia Trust

Research Houses Maintain "Buy Call" On Capitamalls Malaysia Trust
Business & Markets 2013
Written by Bernama
Monday, 22 July 2013 12:32

KUALA LUMPUR, (July 22): AmResearch reaffirms "Buy call" on CapitaMalls Malaysia Trust (CMMT), with an unchanged fair value of RM2.15 per unit based on discounted cashflow valuation.

"CMMT revenue for First half 2013 (1HFY13) rose by four per cent year-on- year to RM149 million, helped by higher rental rates from new and renewed leases and portfolio occupancy remain strong at 98 per cent," the research house said.

AmResearch said the progress of the asset enhancement was on track with refurbishment work at Sungei Wang Plaza expected to be completed by year-end.

"While the mall is poised for better performance thereafter, the Mass Rapid Transit (MRT) work will impact shoppers' traffic until its completion in 2017.

"CMMT is highly diversified in retail space and its portfolio will be able to support any downtime and continue to chart decent growth level.

"Our "Buy Call" is premised on the group's first mover acquisition advantage when compared to other retail Real Estate Investment Trust, forward yields are decent at five per cent level," it added.

Meanwhile, HwangDBS Vickers Research also maintained "Buy Call" for CMMT, but with a lower targeted price at RM2.05.

"The refurbishment to the East Coast Mall requires RM60 million capital expenditure (capex) over 2013 and 2014 and provide returns on investment in the high single digit.

"After adjusting for high capex and incorporating lower earnings and rolling over our valuation base to full financial year 2014, our price target is lowered to RM2.05.

"Sungei Wang Plaza is expected to see flat rental growth while occupancy remain muted due to lower traffic from MRT work. East Coast Mall's gradual refurbishment could result in some rental vacuum staggered over two years, but will result in 20,000 feet new retail space." HwangDBS added.