Following the anticipated weak 1H20 results of CapitaLand Mall Trust (CMT) that have largely come within expectations, things are looking up for the trust amid signs of broad based recovery.
“The release of one-third of income retained in 1Q20, which was earlier than anticipated, reiterates our view that the worse (sic) is likely over,” DBS analyst Derek Tan and the research team write in a note dated July 23.
“Due to the Phase 2 reopening of the Singapore economy and signs of stabilisation in the number of Covid-19 community cases, we lower our cost of equity assumptions by 43 basis points to 6.3%,” the OCBC Investment Research team writes in a July 22 report.
Both DBS and OCBC have a “buy” rating for CMT.
DBS has an unchanged target price of $2.40 for the trust, while OCBC has a higher fair value estimate of $2.29 from $2.12 previously.
In 2Q, CMT was hit by the circuit breaker measures aimed at halting the spread of the Covid-19 pandemic.
Its distribution per unit (DPU) tumbled 27.7% to 2.11 cents in 2Q, from 2.92 cents in the same quarter a year ago.
But OCBC says the trust’s results came within its expectations.
It points out that most of CMT’s tenants have resumed operations.
From June 19 to July 5, average shopper traffic has recovered to 53% of the level a year ago, it says.
It adds that the better performing malls are close to the 80% level, while the weaker malls have recovered to only around 40% or even lower.
DBS says the pre-terminations and tenants seeking rent deferrals were at manageable levels in 2Q.
Nevertheless, tenant sales will be closely watched, it notes, given that all trade categories posted a double-digit y-o-y decline in 1H20 sales.
This is excluding supermarkets and books & stationaries, it says.
As at 11.04 am, CMT was down 2 cents or 1% at $2.00, with 3.9 million units changed hands.
