CapitaLand Mall Trust (CMT) reported its 3Q18 results this morning which met our expectations. Gross revenue and NPI rose 0.7% and 1.1% YoY to S$170.5m and S$122.7m, respectively.

This was led by higher gross revenue from a number of its malls including Junction 8, Bedok Mall and Tampines Mall, but partially offset by the divestment of Sembawang Shopping Centre and lower occupancy and rental rates at JCube and Bukit Panjang Plaza.

DPU increased 5.0% YoY to 2.92 S cents, as management had released S$4.0m of its taxable income available for distribution to unitholders which was previously retained. Excluding this, we estimate that CMT’s adjusted DPU growth would have been more stable at +1.0% YoY to 2.81 S cents.

For 9M18, CMT’s NPI improved 2.8% to S$369.1m, forming 76.8% of our full-year forecast.DPU of 8.51 S cents represented growth of 3.0% and this constituted 75.5% of our FY18 forecast.

Operationally, we note that rental reversions for CMT came in +0.6% for 9M18 (1H18: +0.8%), which implies that 3Q18 had softer rental uplifts. Occupancy was firm, increasing 0.5 ppt QoQ to 98.5%.

We will provide more updates after speaking with CMT. For now we have a HOLD rating and S$2.10 fair value estimate on the stock.

Source: OCBC Research - 25 Oct 2018