Towards Financial Freedom
Positive Results Largely Factored In
CMT reported a DPU of 2.46 cents (+7.0% y-o-y) for 1Q13, in line with our FY13 DPU forecast with a deviation of 0.3%. 1Q13 revenue grew 14.8% y-o-y to SGD178.2m, while net property income climbed 15.5% y-o-y to SGD125.1m. In view of its high valuation, we maintain our Neutral rating on CMT with a slightly revised higher TP of SGD2.36.
- Strong quarter attributed from contributions of completed AEIs. CMT reported a strong 1Q13 results, mainly attributed to higher contributions from the well-executed asset enhancement works at JCube, Bugis+ and The Atrium@Orchard. As of 31st March 2013, the occupancy rates at these malls were 99.5%, 99.5% and 97.4% respectively.
- Positive rental reversion expected from renewal of leases. During 1Q13, 6.2% (as a percentage of NLA) of CMT's portfolio was renewed with an average positive rental reversion of 6.2%. Going forward, with 20.8% of total portfolio (as a percentage of gross rental income) due to expire in FY13, we believe CMT will have minimal difficulties renewing majority of these leases with a mid-single digit positive rental reversion.
- Expected stable earnings to continue. With its portfolio occupancy rate of 98.3% coupled with stable tenant sales (+2.4% in 1Q13) and shopper traffic (+4.3% in 1Q13), we remain confident on the stability of CMT's earnings in FY13.
- AEI at Bugis Junction. The AEI at Bugis Junction will commence in 2Q13. This AEI will involve the recovery of c.70,000 sq ft of space from one the key tenants. This recovered space will then be leased out to specialty stores. The projected capex for this AEI is SGD35m with a target return on investment of 9.0%. The AEI is expected to be completed in 3Q14.
- Maintain Neutral with a higher TP of SGD2.36. Despite a strong quarter, we believe CMT is currently fairly valued as this counter currently trades at a forecasted FY13 yield of 4.5% and 1.3x P/B. In view of these high valuations, we maintained our Neutral rating on CMT with a slightly revised higher DDM-based TP of SGD2.36 (COE: 7.1%, terminal growth: 2.0%). Our TP translates to a forecasted yield of 4.3%.
Source: OSK
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