Equities
20 May 2013 │ 7 pages Retail REIT's (GICS) │ Real Estate Investment Trusts (Citi) Asia Pacific │ Singapore
CapitaMall Trust (CMLT.SI)
Alert: NDR Takeaways
We hosted CMT management on a non-deal roadshow to Hong Kong — Key
Company Update Event
takeaways are presented below. Investors were interested in management’s view on current trends in the retail sector (especially in light of the labour crunch) as well as acquisition and asset enhancement opportunities.
6.2% rental reversion in 1Q was a positive surprise — CMT registered 6.2%
rental reversions in 1Q13, which was in-line with the 6% rental reversion achieved in FY12 (FY11: 6.4%). However, mgmt noted that this level of rental reversion could moderate going forward (for 2Q, mgmt also highlighted that April and May tend to be seasonally weaker months for retail). Much of the headwinds could be attributed to the impact of the labour crunch, particularly within the retail and F&B trades, where it has been challenging to hire shop assistants and wait staff. This has then put pressure on retailers hoping to extend their operating hours or expand their operations. Slower population growth could also mean weaker growth in retail. All in, mgmt felt that demand for retail space could moderate going forward. This is because cost pressures on the labour front mean that even if CMT maintains its occupancy costs (currently 16%), retailers’ margins could come under pressure. That said, mgmt felt that CMT was in a good position to mitigate this as 73% of its gross revenue (on 2012 numbers) was attributed to necessity shopping.
AEI opportunities — Investors asked about future scope for asset enhancement
Buy Price (20 May 13) Target price Expected share price return Expected dividend yield Expected total return Market Cap
1 S$2.29 S$2.42 5.7% 4.4% 10.1% S$7,918M US$6,289M
Price Performance (RIC: CMLT.SI, BB: CT SP)
initiatives (AEIs) as the recently announced