While most analysts have turned sanguine on CapitaLand Mall Trust (CMT), RHB Securities is less optimistic.
The brokerage says shopper traffic remains “far from normal”, though it has picked up as Singapore reopens its economy under Phase 2.
It also points out that there are “clear signs” of pressure on mall occupancy and rents.
“We expect the retail sector outlook to remain challenging in the mid- to long-term with Covid-19 accelerating structural headwinds,” RHB analyst Vijay Natarajan writes in a note dated July 23.
RHB has lowered its distribution per unit (DPU) forecast for FY20 by 6% to factor in additional rent rebates.
However, the brokerage has raised its DPU forecasts for FY21-22 by 1% on lower interest costs.
RHB has maintained its “neutral” recommendation for CMT with an unchanged target price of $2.03.
On the other hand, Phillip Securities has kept its “buy” call for CMT with an unchanged target price of $2.33.
“We are keeping our estimates unchanged as we have previously incorporated [about] $80 million of out-of-pocket (OOP) rental rebates, above the $76.5 million OOP rebates guidance for 1H20,” Phillip analyst Natalie Ong writes in a July 24 report.
Similarly, Maybank Kim Eng has reiterated its “buy” rating for CMT albeit with a lower target price of $2.35 from $2.40 previously.
It notes that CMT’s valuations are undemanding at 6.0% FY21 yield and 1-time book value.
It points out that CMT’s balance sheet remains strong with a low leverage level of 34.4%, interest coverage of 4.2 times and debt headroom of $2.9 billion to $4.4 billion.
As at 3.35 pm, CMT was down 4 cents or 2% at $1.99 with 8.7 million units changed hands.
