SINGAPORE (May 29): Following the announcement that retail tenants could potentially resume operations as early as end-June, CapitaLand Mall Trust (CMT) is now an opportunity to accumulate on dips, according to DBS Group Research.
The brokerage notes that CMT had suffered a recent sell down as the novel coronavirus (Covid-19) pandemic worsened in Singapore.
It points out that the trust is currently trading at 0.9 times net asset value and -2 standard deviation levels.
“History shows that CMT does not trade below book for long, and the current range represents an attractive risk-to-reward ratio,” DBS analyst Derek Tan writes in a note dated May 29.
Hence, DBS has upgraded CMT to a “buy” rating from “hold” previously and raised its target price to $2.15 from $1.75.
Yesterday, National Development Minister Lawrence Wong announced that Phase 2 of the exit of the circuit breaker could happen before end-June if community transmission remains low and stable.
Phase 2 will see the opening of retail shops, consumer services, and dining in at food and beverage outlets, subject to a cap of five people per group.
DBS reckons that about 90% of retail tenants within CMT’s portfolio will be allowed to resume operations in Phase 2, up from the current 30% of tenants.
“We estimate that half of these tenants (Food & Beverage and Beauty & Health) are from trade sectors that will see a sharp recovery,” Tan says.
As at 10.29 am, CMT was down 1 cent or 0.5% at $1.92, with 11.7 million units changed hands.