CapitaLand Mall Trust (CMT) reported its 3Q15 results this morning which met our expectations. Although gross revenue fell slightly by 1.8% YoY to S$161.7m due to lower contribution from IMM, JCube and Clarke Quay, DPU rose 9.6% YoY to 2.98 S cents. This was driven by a higher NPI margin, lower finance costs, improved distribution from its JVs and associate, and the release of S$8m of taxable income which was retained in 1Q15. On a 9M15 basis, CMT’s gross revenue was lower by 1.0% to S$488.6m and formed 74.3% of our FY15 forecast.

DPU of 8.37 S cents represented a positive growth of 4.9%, and constituted 75.2% of our full-year projection. Encouragingly, CMT’s 9M15 shopper traffic and tenants’ sales psf per month increased 4.2% and 4.4%, respectively, despite the soft economic environment. Following our upgrade on CMT to a BUY on 15 Sep 2015, the stock has appreciated 9.6% to S$2.05. We will provide more details later, but with the strong share price outperformance in the past one month, we are reviewing our BUY rating and S$2.10 fair value estimate.

Source: OCBC Research - 22 Oct 2015