CMT – CIMB

An AEI-ventful year

CMT could start reaping the fruits of its labour this year from a few major AEI completions. These would include the newly-opened JCube and its upcoming Atrium@Orchard and Iluma. Our JCube visit and strong tourist arrivals leave us confident of its performance this year.

We adjust DPUs by -1% to +3% on housekeeping matters but keep our DDM target price (discount rate: 8.6%). Maintain Outperform for its exposure to resilient mall spending, with upside from strong city malls and higher-than-expected ROIs from AEI.

JCube visit fuels positivity

We visited CMT‟s newly-opened JCube and came away positive on management‟s design and leasing capabilities. The mall is fully pre-committed. Though some stores (est. 10-15%) have yet to open, JCube was bustling with families and teenagers on a weekend afternoon. JCube has a good mix of F&B and activity-oriented (sports, hobbies & collectibles, IT, entertainment) tenants with fewer fashion offerings, in a possibly deliberate attempt to limit head-on competition with nearby malls, and Lend Lease‟s upcoming JEM and Capland/CMA/CMT‟s Westgate.

More AEI completions

Having gone through a bout of AEI works in 2011, 2012-13 could be years of reckoning. Apart from JCube, major AEIs slated for completion this year include Iluma and Atrium@Orchard. We are hopeful of upside given these malls‟ exposure to tourism spending in the core central region. We expect this to mitigate opex pressures stemming from higher utility and security expenses. New malls (after AEI) such as JCube also typically come with energy-saving features to lower utility expenses.

Tourism boost for city malls

We expect CMT‟s city malls to benefit from surging tourist arrivals. 2M12 tourist arrivals were up 14% yoy, quashing our previous expectation of 3-5% growth for the year. With Atrium@Orchard being the sole retail addition in the core central region this year, we expect CMT‟s city malls to benefit. Particularly, AEI completion at Atrium@Orchard and Iluma is expected this year, which should position both well in rental negotiations.