CMT – DBS

Stability amid turmoil

Comment on Results

• CMT reported FY07 results in line with estimates. Revenue and NPI grew by 30.2% and 32.2% y-o-y to S$431.9m and S$287.8m respectively. This was mainly due to full
contributions from the Raffles City acquisition as well as buyback of CRS assets from 1 June 07. As an indication of organic growth, comparison of 4Q06 asset base into 4Q07 reflects revenue increase of 5.2%.

• FY07 DPU of 13.34 cents was registered, translating to 5% yield. This includes S$4.6m capital
distribution which was previously retained in 1Q07 to manage cashflows for AEI initiatives.

• CMT’s gearing has reached 34%. Interest cover remains healthy at 5.3x, and average cost of debt remains stable at 3.2%.

Recommendation

• Despite strong sponsorship from CapitaLand and consistently delivering value through AEI initiatives which backs our Buy recommendation for CMT; we believe concerns over a lack of
liquidity from debt and equity markets to fund acquisitions (which could lead to possible muted AUM growth) has led to negative sentiment for the S-REIT sector and CMT.

• However with current c.34% leverage, CMT is still able to achieve its targeted S$7bn AUM by 2009 (S$8bn by 2010) by funding acquisitions fully by debt while maintaining leverage levels
around targeted 45%. Sponsor pipeline remains visible with the line of ION Orchard, Clarke Quay and One North assets.

• We derive our DCF-based target price of S$4.05 for CMT after paring down acquisition assumptions.