capital mall trust
DESCRIPTION
Capital Mall TrustTRANSCRIPT
Promising start to FY13
CapitaMall Trust (CMT) turned in a strong set of 1Q13 results last
Friday. As we have previously expected, NPI and distributable income
grew by 15.5% and 14.3% YoY to S$125.1m and S$93.7m,
respectively, on the back of incremental income from JCube, Bugis+
and The Atrium@Orchard following the completion of their asset
enhancement initiatives (AEIs). DPU came in at 2.46 S cents,
representing an increase of 7.0% YoY despite a retention of S$8.4m in
income for the quarter. This is slightly ahead of our expectations, as
S$6.6m or ~0.19 S cents in taxable income may be distributed in
FY13 (1Q DPU already formed 25.2% of our FY13F DPU).
Steady operational performance
Operationally, we note that CMT continued to deliver on various
fronts. Notwithstanding a slight dip in occupancy at IMM Building due
to ongoing AEI, portfolio occupancy inched up 0.1ppt QoQ to 98.3%
amid stronger take-up rates at The Atrium@Orchard. Steady positive
rental reversion of 6.2% was also achieved during the quarter,
consistent with our view for a 6.0-6.5% increase. In addition, 1Q
shopper traffic improved 4.3%, while tenant sales climbed 2.4% YoY.
Maintain BUY with higher fair value
CMT updated that the repositioning of IMM Building has been gaining
traction, as evidenced by the commitment of another 10 outlet brands
in 1Q (total: 50 outlets). We also understand that the space vacated
by Carrefour in 4Q12 at Plaza Singapore has been leased to Cold
Storage (operational on 18 Mar) and John Little and British retailer
George (open in Jul), much to our delight. ~S$8.7m in capex is
estimated for reconfiguration of the space and AEI, with target ROI to
come in at 9.8%. As previously guided, CMT announced a new AEI at
Bugis Junction, which is expected to last from 2Q13 to 3Q14
(S$35.0m capex, 9.0% ROI). We remain positive on CMT’s
performance going forward, in view of these positive developments.
We are raising our fair value from S$2.32 to S$2.43 after factoring
the better-than-expected results and new initiatives. Maintain BUY.
RESULTS FROM AEIS NOW APPARENT • AEIs come to fruition
• Progress on various fronts
• New initiatives to sustain growth
22 Apr 2013 Company Update
CAPITAMALL TRUST | BUY
Asia Pacific Equity Research
Singapore | REITs
BUY (maintain) Fair value S$2.43
add: 12m dividend forecast S$0.10
versus: Current price S$2.26
12m total return forecast 12%
Analysts
Kevin Tan (Lead) ● +65 6531 9810
Sarah Ong ● +65 6531 9678
Key information
Market cap. (m) S$7,813 /
USD6,324
Avg daily turnover (m) S$16 /
USD13
Avg daily vol. (m) 7.8
52-wk range (S$) 1.745 - 2.32
Free float (%) 59.2
Shares o/s. (m) 3,457.1
Exchange SGX
BBRG ticker CT SP
Reuters ticker CMLT.SI
ISIN code C38U
GICS Sector Financials
GICS Industry REITs
Top shareholder CapitaLand -
27.6%
Relative total return 1m 3m 12m
Company (%) 8 5 28
STI-adjusted (%) 7 2 15
Price performance chart
1.46
1.67
1.89
2.11
2.33
2.55
Apr -12 Jul -12 Oct-12 Jan-13
2300
2680
3060
3440
3820
4200
Fair Value CT SP FSSTI
Shar e Pr i ce (S$) Index Level
`
Sources: Bloomberg, OIR estimates
Industry-relative metrics
0th 25th 50th 75th 100th
PB
PE
ROE
Beta
M kt Cap
Company Indust r y Aver age
Per cent i l e
Note: Industry universe defined as companies under identical GICS classification
listed on the same exchange. Sources: Bloomberg, OIR estimates
Key financial highlights
Year Ended 31 Dec (S$ m) FY11 FY12 FY13F FY14F
Gross revenue 630.6 661.6 709.6 783.5
Total property expenses -212.3 -216.3 -227.5 -249.9
Net property income 418.2 445.3 482.1 533.6
Amount available for distribution 301.6 316.9 339.3 388.0
DPU per share (S cents) 9.4 9.5 9.8 11.2
Cons. DPU (S cents) na na 10.2 10.9
DPU yield (%) 4.1 4.2 4.3 5.0
P/NAV (x) 1.4 1.4 1.4 1.4
ROE (%) 7.5 9.8 6.0 6.9
Debt/Assets (%) 37.3 36.1 36.4 36.6
Please refer to important disclosures at the back of this document. MICA (P) 035/06/2012
MARKET CAP: USD 6.3B AVG DAILY TURNOVER: USD 13M
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Singapore Equities
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Exhibit 1: Financial performance at CMT's properties
Source: Company
Exhibit 2: Debt maturity profile
Source: Company
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Singapore Equities
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Exhibit 3: Rental rate increases at CMT's properties
Source: Company
Exhibit 4: Lease expiry profile
Source: Company
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Singapore Equities
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Exhibit 5: Value creation from Bugis Junction AEI
Source: Company
Exhibit 6: Value creation from Plaza Singapura AEI
Source: Company
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Singapore Equities
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Exhibit 7: Quarterly financial highlights
1Q12 1Q13 % Chg 4Q12 % Chg
(S$m) (S$m) (YoY) (S$m) (QoQ)
Gross revenue 155.2 178.2 14.8% 173.7 2.6%
Property operating expenses -46.9 -53.1 13.2% -60.8 -12.6%
Net property income 108.3 125.1 15.5% 112.9 10.8%
Management fees -10.3 -10.9 5.4% -11.1 -1.5%
Trust expenses -1.3 -1.2 -3.4% -1.1 9.0%
Foreign exchange gain - realised 0.0 0.0 nm 0.0 nm
Finance income 0.9 3.4 281.1% 2.1 58.0%
Finance costs -31.7 -30.7 -3.2% -34.2 -10.3%
Share of profit of associate 7.6 10.4 35.8% 2.5 317.3%
Net income 73.6 96.1 30.6% 71.2 35.0%
Loss on repurchase of convertible bonds 0.0 0.0 nm -5.1 -100.0%
Net change in fair value of financial derivatives 0.1 1.4 1828.4% 1.5 -7.0%
Change in fair value of investment properties 0.0 0.0 nm 69.0 -100.0%
Gain on divestment of investment property 0.0 0.0 nm 0.0 nm
Total return for the year before income tax expense 73.6 97.5 32.4% 136.6 -28.6%
Income tax expense 0.0 0.0 -100.0% 0.0 -100.0%
Total return for the year after income tax expense 73.6 97.5 32.4% 136.6 -28.6%
Non-tax deductible expenses, net and other adjustments 8.4 -3.8 nm 16.1 nm
Change in fair value of investment properties 0.0 0.0 nm -69.0 -100.0%
Income available for distribution 82.0 93.7 14.3% 83.8 11.9%
Less: Non-controlling interests 0.0 0.0 nm 0.0 nm
Less: Other adjustments -5.4 -8.4 55.6% -4.0 113.6%
Total amount available for distribution 76.6 85.3 11.3% 79.8 6.9%
Distributions per unit (S cents) 2.3 2.5 7.0% 2.4 4.2%
Sources: Company financials
Exhibit 8: Valuation methodology
RNAV valuation S$ '000
Valuation of investment properties 10,888,305
Book value of investment properties 8,191,800
Surplus from investment properties
attributable to unitholders 2,696,505
Book value 5,702,926
RNAV 8,399,431
Number of units outstanding ('000) 3,458,921
RNAV per share (S$) 2.43
Discount to RNAV 0.0%
Fair value (S$) 2.43
Current price (S$) 2.26
Potential upside (%) 7.5%
DPU yield (%) 4.3%
Total expected return (%) 11.9%
Source: OIR estimates
OCBC Investment Research Singapore Equities
Company financial highlights
Company financial highlights
Income statement
Year Ended 31 Dec (S$ m) FY11 FY12 FY13F FY14F
Gross revenue 630.6 661.6 709.6 783.5
Total property expenses -212.3 -216.3 -227.5 -249.9
Net property income 418.2 445.3 482.1 533.6
Net finance costs -132.6 -132.4 -134.4 -136.9
Property management fees -39.4 -43.4 -44.6 -46.1
Other expenses 22.2 15.4 21.3 23.5
Net income 268.5 284.9 324.4 374.2
Total return for the period 384.2 536.3 344.3 394.5
Adjustments -82.7 -219.4 -5.0 -6.5
Amount available for distribution 301.6 316.9 339.3 388.0
Balance sheet
As at 31 Dec (S$ m) FY11 FY12 FY13F FY14F
Investment properties 7,849.2 8,191.8 8,251.9 8,529.7
Properties under development 306.6 336.0 402.2 224.6
Cash 757.6 1,118.3 1,079.7 1,131.4
Total current assets 787.6 1,131.3 1,094.1 1,147.4
Total assets 9,172.2 9,888.7 9,977.9 10,131.5
Current liabilities ex debt 256.3 289.2 283.9 313.5
Debt 3,423.9 3,567.3 3,627.1 3,710.9
Total liabilities 3,926.2 4,185.8 4,247.2 4,371.0
Unitholders' funds 5,246.0 5,702.9 5,730.7 5,760.5
Total equity and liabilities 9,172.2 9,888.7 9,977.9 10,131.5
Cash flow statement
Year Ended 31 Dec (S$ m) FY11 FY12 FY13F FY14F
Net income 268.5 284.9 324.4 374.2
Adjustments 112.9 119.0 114.4 114.3
Operating income before working cap chgs 381.4 403.9 438.9 488.5
Change in working capital 2.0 61.3 2.6 41.3
Cash generated from operating activities 383.4 465.1 441.5 529.8
Cashflow from investing activities -718.3 -124.9 -91.0 -62.8
Cashflow from financing activities 379.6 20.4 -389.1 -415.2
Change in cash 44.7 360.6 -38.6 51.8
Cash at beginning of period 713.0 757.6 1,118.3 1,079.7
Cash at end of period 757.6 1,118.3 1,079.7 1,131.4
Key rates & ratios FY11 FY12 FY13F FY14F
DPU per share (S cents) 9.4 9.5 9.8 11.2
NAV per share (S cents) 157.6 165.0 165.7 166.4
P/E (x) 20.2 15.0 24.0 21.0
P/NAV (x) 1.4 1.4 1.4 1.4
NPI margin (%) 66.3 67.3 67.9 68.1
Net income margin (%) 42.6 43.1 45.7 47.8
Debt/Assets (%) 37.3 36.1 36.4 36.6
DPU yield (%) 4.1 4.2 4.3 5.0
ROE (%) 7.5 9.8 6.0 6.9
ROA (%) 4.4 5.6 3.5 3.9
Sources: Company, OIR forecasts
Important disclosures
OCBC Investment Research Singapore Equities
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Carmen Lee Head of Research
For OCBC Investment Research Pte Ltd
Published by OCBC Investment Research Pte Ltd