CapitaLand Mall Trust's (CMT) 2Q19 results were within expectation. 2Q19 gross revenue increased 10.6% YoY to S$189.5m, mainly due to the completion of the acquisition of the remaining 70.0% interest in Westgate on 1 Nov 2018. After reopening on 28 Jun 2019 after three years, Funan contributed S$0.9m in revenue.

As at 30 Jun 2019, occupancy at Funan stands at 96.1%. The increase in CMT’s revenue was partially offset by lower gross revenue from Sembawang Shopping Centre, which was divested on 18 Jun 2018. 2Q19 NPI increased 10.2% YoY.

2Q19 DPU was up 3.9% to 2.92 S cents, which made up 24.4% of our full-year forecast. For 1H19, CMT's portfolio clocked positive rental reversions of 1.8%. Shopper traffic increased 1.9% in 1H19 while tenant sales dipped 0.9%.

Looking forward, we note that 3Q19 will see the first full-quarter contribution from Funan and the start of Lot One Shoppers’ Mall's rejuvenation. We maintain HOLD while placing our fair value of S$2.33 under review pending further details.

Source: OCBC Research - 23 Jul 2019