FY13 results in line with our and market expectations. 

 

No material impact from Westgate Tower sale with only marginal 1 SGD cts/share accretion. Capital distribution unlikely. 

 

Maintain HOLD on valuation grounds and uninspiring DPU growth prospects as most of the eligible malls in its portfolio have already undergone asset enhancements. 

CMT’s FY13 revenue grew 10.2% YoY to SGD729m, attributable to the reopening and completion of AEIs at JCube, Bugis+ and Atrium, as well as the opening of Westgate on 2 Dec 2013. Full-year DPU, which grew 8.6% to 10.27 SGD cts, was within our expectations. 

CMT saw a 6.3% increase in positive rental reversion in FY13, renewing 629 leases. About 696 leases, constituting 21% of gross rental, will expire in FY14. Portfolio occupancy rate remained strong at 98.5% (FY12: 98.2%). Aggregate leverage was 35.3%, up slightly from 34.8% in the previous quarter due to new borrowings. 

At the results briefing today, CMT said that should Sun Venture and Low Keng Huat exercise the option to buy its 30% stake in Westgate Tower for SGD579.4m (option deadline: 24 January), it intends to retain the divestment proceeds for future capex and working capital use and not distribute the gains to unitholders. Based on the purchase consideration of SGD1,900 psf, we value CMT’s stake at ~SGD1,400 psf, which works out to a marginal 1 SGD cts/share accretion. Maintain HOLD on valuation grounds and uninspiring DPU growth prospects as most of the eligible malls in its portfolio have already undergone asset enhancements. We forecast 2.5% DPU CAGR over FY13-16E. Yield-accretive acquisitions, if any, would be a positive catalyst for the stock. Until then, we keep our DDM-derived TP unchanged at SGD2.05 (7% discount rate).