CapitaLand Mall Trust to deliver higher returns in near-term, but positives already priced in: OCBC

SINGAPORE (June 6): OCBC Investment Research is maintaining “hold” on CapitaLand Mall Trust (CMT) while raising its fair value estimate by a cent to $2.33 on the faster-than-expected ramp up of Funan.

This comes after CMT’s manager announced the impending opening of the integrated development on June 28, two months ahead of the original scheduled date.

In response, OCBC has raised its FY19 and FY20 DPU forecasts by 0.5% and 2%, respectively, based on projections for the development’s retail and office components to contribute 3.2% and 7.6% of FY19 and FY20 net property income (NPI) forecasts in aggregate.

In a Thursday report, analyst Andy Wong says he believes the pre-committed occupancy of 92% for Funan’s retail component is a firm commitment level that bears testament to the development’s unique positioning and CMT’s strong marketing efforts.

While he likes CMT for its resilient portfolio and strong track record, which makes it a “defensive shelter amid the ongoing trade tensions”, the analyst believes these positives have already been priced in.

“CMT is currently trading at blended FY19/20F distribution yield of 5.0%, as at 4 June closing price. This is 1.3 standard deviations below its 8-year mean of 5.4%,” notes Wong.

As at 10:57am, units in CMT are trading 4 cents higher at $2.50, implying a FY20F DPU yield of 5.28 times.