CapitaLand Mall Trust (CMT) announced its 2Q15 results this morning which met our expectations. Gross revenue slipped 2.9% YoY to S$159.6m due largely to a fall in income from IMM following ongoing phase 2 AEI and lower occupancy from JCube and Clarke Quay. DPU rose slightly by 0.7% YoY to 2.71 S cents.

For 1H15, CMT’s gross revenue was down marginally by 0.6% to S$329.0m, forming 47.9% of our FY15 forecasts. DPU rose 2.5% to 5.39 S cents and constituted 48.4% of our full-year estimate. If we include the ~0.23 S cents/unit of distributable income retained in 1Q15, 1H15 DPU would have formed 50.5% of our FY15 projection.

Although shopper traffic and tenants’ sales psf grew YoY in 1H15, rental reversions moderated to 4.6% (1Q15: 6.1%), highlighting the tough leasing environment. We will provide more details after the analyst briefing. Maintain HOLD and S$2.21 fair value estimate on CMT.

Source: OCBC Research - 22 Jul 2015