Hong Leong maintains 'hold' on CMMT, with higher TP

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KUALA LUMPUR (Oct 23): Hong Leong Investment Bank has maintained its “hold” call on CapitaMalls Malaysia Trust (CMMT), but revised the target price for the shopping mall real estate investment trust to RM1.46 from RM1.36.

Based on CMMT’s third quarter financial results ended Sept 30, 2014, the research house noted in a note today that year-to-date core net profit came in within its expectation but slightly below consensus, accounting for 71.8% and 71.0% respectively.

Hong Leong Investment said CMMT's distribution per unit (DPU) of 2.12 sen in its third quarter brought year-to-date DPU to 6.65 sen, which was within 77.8% of the research house full year DPU expectation.

According to a filing with Bursa Malaysia on Tuesday, CMMT reported a net property income of RM50.6 million for the third quarter 2014 (3QFY14), 2.2% lower than the corresponding quarter last year.

It recorded a marginally higher revenue mainly due to full quarter contribution from its East Coast Mall and higher gross rental income on the back of higher rental rates.

The REIT noted it had incurred RM13.4 million capital expenditure in the quarter due to renovation works in Gurney Plaza and East Coast Mall.

For the nine-month period, distributable income came in at RM118.17 million versus RM117.02 million in the previous corresponding period, while revenue rose slightly to RM235.1 million, from RM226.3 million a year ago.

“With improvements in the East Coast Mall, these will provide a boost to our net property income,” said Low Peck Chen, CEO-designate of CapitaMalls Malaysia REIT Management Sdn Bhd, which is the manager of CMMT.

CMMT fell one sen or 0.69% to RM1.42 as at 10:41 am today, with 319,600 shares transacted, giving it a market capitalisation of RM 2.52 billion.