Already a safe harbour, CapitaLand Mall Trust is starting to emerge as a growth play: DBS

Already a safe harbour, CapitaLand Mall Trust is starting to emerge as a growth play: DBS

Michelle Zhu
07/12/18, 03:56 pm

SINGAPORE (Dec 7): DBS Vickers Securities reiterates its “buy” call on CapitaLand Mall Trust (CMT) with an adjusted target price of $2.44, which now reflects a higher proportion of equity used to finance its acquisition of Westgate mall.

In a Thursday report, analyst Carmen Tay say she expects a re-rating of CMT’s unit price as its earnings growth returns to an upward trajectory of about 3-4% per annum, versus S-REITs’ average of about 1-2%.

“Expectations for CMT are low, as investors are barely anticipating any rental reversion growth, in our view. The recent uptick in retail sales, if sustained, limits downside to rental reversions, and may trigger a share price re-rating. The utilisation of its balance sheet to fund further acquisitions also offers an upside surprise to our estimates,” explains the analyst.

The REIT offers FY19F yield of 5.2% and total potential returns in excess of 14%, based on the research house’s estimates and at its Dec 6 closing price of $2.26.

“Anchored by resilient yields, CMT has been a safe harbour for investors but is also starting to emerge as a growth play. As the retail sector bottoms out, CMT is set to outperform as full contributions from Westgate and the return of Funan takes DPU back on a multi-year growth path,” says Tay.  

Despite uncertainties over a surge in new retail supply over 2018-2019, the analyst does not think this will pose a big threat to CMT, considering its strong pre-commitments ahead of completion.

“Meanwhile, higher contributions from Westgate and Funan will help drive up DPUs in a sustained manner. Our deep dive into Westgate also gives us confidence that the worst is over for the mall – rents appear to be bottoming out, offering upside to reversions as they fall due,” she adds.  

As at 3.54pm, units in CMT are trading 1 cent higher at $2.27 or 19.4 times FY18F earnings.

Lendlease a step closer to listing of mall REIT on SGX: reports

SINGAPORE (May 23): Australia’s Lendlease could potentially be the next REIT to list in Singapore, following the footsteps of two recent US REITs. According to The Australian, Lendlease has appointed investment banks Citigroup and DBS to handle the listing. The Singapore trust, to be named Lendlease Global Commercial REIT, could be seeded with shopping centre assets worth A$1 billion ($948 million). Listed on the Australia stock exchange (ASX), Lendlease is a integrated construction, engineering and property company. Singaporeans may also be familiar with Lendlease given the comp....

China defence minister to attend summit amid rising US tension

(May 22): Chinese Defence Minister Wei Fenghe will address top diplomats at an upcoming summit in Singapore in a speech that could be pivotal amid rising tensions between the US and China. The International Institute for Strategic Studies (IISS) announced the late addition Monday to a roster of ranking officials that includes US Acting Secretary of Defence Patrick Shanahan attending the three-day IISS Shangri-La Dialogue from May 31. Wei is scheduled to deliver a speech on China’s place in the Indo-Pacific region on the final day of the conference and will take questions afterwards, wh....

SingHaiyi reports 48% rise in 4Q earnings to $9.7 mil on higher margins from US development

SINGAPORE (May 22): Property developer SingHaiyi Group reported a 47.6% rise in 4Q19 earnings to $9.7 million from a year ago, bringing FY19 earnings to $22.6 million, 20.3% lower than a year ago. 4Q19 revenue declined 67.6% to $9.8 million from a year ago mainly due to the decrease in revenue recognised for the group’s completed Executive Condominium project, The Vales, and the group’s completed private condominium, City Suites. The lower topline was partially offset by the sales of the group’s completed commercial condominium project in the United States – Vietnam Town Phase II....