CapitaLand Mall Trust (CMT) reported its 4Q17 results which met our expectations. Gross revenue and NPI grew 1.8% and 2.6% YoY to S$172.4m and S$119.3m, respectively. This was largely driven by higher occupancy at Bugis Junction and The Atrium@Orchard, coupled with higher carpark income, but partially offset by lower rentals at Bedok Mall.

DPU for the quarter inched up 0.7% YoY to 2.90 S cents, as management released S$7.6m of its taxable income available for distribution retained in 1H17 to unitholders.

For FY17, CMT’s gross revenue was down 1.1% to S$682.4m and formed 99.8% of our forecast. DPU of 11.16 S cents represented a mild growth of 0.3% and met 100.4% of our full-year projection. Operationally, CMT’s shopper traffic slipped marginally by 0.3% in FY17, while tenants’ sales psf/month held steady.

On a positive note, its average occupancy cost declined from 19.0% in FY16 to 18.7%. Rental reversions were lower by 1.7% for the full-year, similar to its 9M17 figure, which implies that rental changes were flattish in 4Q17. Portfolio occupancy remained high at 99.2%.

We will provide more details after the analyst briefing. Maintain BUY on CMT but our S$2.20 fair value will be up for review.

Source: OCBC Research - 24 Jan 2018