CapitaMalls M’sia Trust - FY12 within

Period     4Q12

Actual vs. Expectations    FY12 realized net income (RNI) of RM149.1m was within expectations, making up 95% of street and 103% of our estimates. Portfolio occupancy rates remained at a healthy 98.5%, similar to a quarter ago.

Dividends     4Q12 dividend of 2.11 sen, bringing full year dividend to 8.44 sen. 

Key Results Highlights     YoY, FY12 RNI grew 24% due to full year contributions from East Coast Mall (ECM) and positive rental reversions of +6.4% mainly due to ECM (changes of tenant mix) and Gurney Plaza (post 2011 enhancement works). FY12 NPI margins decreased to 67% from 70% due to higher electricity costs, higher staff costs and higher maintenance expenses.

QoQ, 4Q12 RNI was flattish given no major changes in occupancy rates and rental reversions. 

Outlook     Sungei Wang Plaza refurbishment works have already commenced and will cost about RM18m over FY13.

Sungei Wang Plaza’s FY12 NPI was flat YoY due to change in tenant mix and MRT works nearby causing inconvenience to visitors. For the moment, we are only estimating marginal NPI growth for FY13E pending further clarity from management. 

As for the rest of its malls, expect c. RM5m to be spent on each mall for asset enhancement initiatives (AEI) this year. 

CMMT  has  embarked  on  on-selling  electricity  to  its tenants in Gurney Plaza from mid-2012 and might extend it to Mines, ECM and Sungei Wang. However, it has minimal impact to our earnings at this juncture.  

Change to Forecasts    No changes to FY13E earnings while we introduce FY14E RNI of RM156m. This implies FY13-14E GDPU of 8.3 sen-8.8sen (4.4%-4.7% yield).  

Valuation      We have upgraded our target price to RM1.90 from RM1.80 based on a lower target gross dividend yield of 4.4% vs. 4.7% previously. We have lowered our 10-yr MGS assumption to 3.0% from 3.3% on heightened GE risks and the global economic headwinds but maintain a spread of 1.4%, implying a targeted FY13E gross yield of 4.4%.

Rating    Maintain MARKET PERFORM

Although we have raised our TP, we maintain our rating for CMMT as there is no clarity on any asset injection or the timing of acquisition of its parent’s Capita Malls Asia’a Queensbay Mall.

Risks    Risks to calls are further compressions in the 10-year MGS beyond our expected FY13E 3.0% and lack of yield accretive asset acquisitions.   

Source: Kenanga