CMT – BT

CMT Q4 distributable income dips

Fall lower than forecast; trust upbeat on future growth

CAPITAMALL Trust (CMT) rounded up the financial year with a 1.4 per cent year-on-year drop in distributable income in its final three months, though the fall was less than forecast.

In an announcement yesterday before the market opened, CMT said that distributable income to unitholders slipped to $75.4 million for the October-December period from $76.5 million before. But the fall was smaller than expected as the forecast distributable income was $73.9 million.

Distribution per unit (DPU) is 2.36 cents, compared with 2.4 cents a year earlier.

Unitholders will receive their payouts on Feb 28.

The DPU translates to an annualised distribution yield of 4.93 per cent based on CMT’s closing price of $1.90 on Jan 19.

A major contributor to the fall was finance expenses, which shot up 29.7 per cent on-year to $30.7 million due to higher interest costs incurred from the issue of fixed rate notes. This eroded a pick-up in gross sales and net property income.

Gross revenue edged 8 per cent higher to $151.3 million as compared with the corresponding period a year earlier, while net property income for Q4 climbed 5.7 per cent to $101.5 million.

CMT closed trading yesterday one cent lower at $1.89.

Said DMG in a research note: ‘While we continue to recognise CMT’s impeccable mall management expertise, and positive outlook on suburban mall rents given recovery in domestic demand and robust tourist arrivals, valuations for the counter appear rich.

‘Without accretive acquisitions, we believe the stock is fully valued.’

It is ‘neutral’ on CMT, and has set a unit price target of $2.

Standard Chartered Equity Research said that it has lowered its DPU expectations for the trust for FY2011.

‘We think CMT’s performance is likely to be capped in the next six months,’ said Standard Chartered.

It has kept its ‘outperform’ call and $2.39 price target on CMT, noting that the trust’s potential acquisitions and greenfield developments ‘can still act as positive surprises’.

Meanwhile, CMT has painted an upbeat picture on future growth.

Simon Ho, chief executive of CMT’s manager CapitaMall Trust Management Ltd, said: ‘We expect CMT to continue to enjoy healthy organic growth through continued positive rental increases … In 2011, we will also continue to focus on acquisitions of yield-accretive properties and selective participation in greenfield development projects.’

The completion of CMT’s asset enhancement works at Raffles City Shopping Centre will allow the trust to reap an incremental annual net property income of about $1.2 million this year, said Mr Ho. CMT has a 40 per cent stake in the mall.

The trust’s portfolio includes Tampines Mall, Funan DigitaLife Mall, Bugis Junction, Rivervale Mall and Plaza Singapura.

Mr Ho added that CMT will kick-start asset enhancement works for The Atrium@Orchard in January 2011.

For the full year, distributable income rose 4.6 per cent to $294.8 million. DPU was 9.24 cents against 8.85 cents a year ago.

Gross revenue increased 5.1 per cent to $581.1 million.