Tip of the iceberg. CapitaMall Trust (CMT) reported a 4Q12 distributable income of SGD79.8m (+6% YoY; -1% QoQ), for a full-year distributable income of SGD316.9m (+5% YoY). This translates to a 4Q12 DPU of 2.36 cents and FY12 DPU of 9.46 cents, in line with expectations. We expect the recently completed AEIs to contribute more meaningfully in FY13, with a high possibility of announcements on new AEIs to be made in the 1Q13 results. Maintain BUY.

Growth driven by completed AEIs. On a comparable basis, CMT’s FY12 gross revenue inched up by barely 1.0% YoY, tracking its tenants’ sales growth of 1.6% YoY. Revenue and NPI contributions from JCube and Bugis+, two malls that have completed their AEIs in FY12, amounted to SGD44.9m (6.8% of total revenue) and SGD24.5m (5.5% of total NPI) respectively. AEI works at The Atrium@Orchard were completed in end-October, but since opening, the property has attracted 1.2m visitors a month on average.

Not ready to announce new AEIs. Besides looking for yield-accretive acquisitions and greenfield sites possibly from the Government Land Sales programme, management alluded that it is reviewing the options and evaluating the costs of potential AEIs at Funan and Tampines Mall to take advantage of the unused GFA. However, it is not ready to provide more details until the plans are firmed up.

Other works ongoing. For now, CMT’s project pipeline comprises the repositioning of IMM to house up to 50 outlet stores, as well as the construction of Westgate Mall, which is on track to open before Christmas this year. Tenants that have already committed to space at Westgate include Isetan, Food Republic and Fitness First gym. Westgate office tower will be completed around a year later, with the CapitaLand group already announced as an anchor tenant.

Attractive as it is. We raise our DDM-derived target price to SGD2.36, without factoring in the potential AEI works at Funan and Tampines Mall or any yield-accretive acquisitions. With its strong track record of delivering DPU growth via successful AEIs, we maintain our BUY recommendation.

Source: Maybank Kim Eng Research - 21 Jan 2013