TA Research said CLMT is actively seeking yield-accretive investment opportunities.
PETALING JAYA: Analysts are split in their outlook for real estate investment manager Capitaland Malaysia Trust
(CLMT), although it financial performance was within expectations for its first half of the year (1H24).
TA Research and Kenanga Research noted CLMT’s net profit and distribution per unit in 1H24 had been satisfactory, with the former believing prospects are looking bright for the investment trust.
In a research note, TA Research stated the introduction of new retail concepts, tenant offerings and targeted shopper activation programmes across CLMT’s malls has led to a 6.5% year-on-year (y-o-y) increase in shopper traffic and a 6.6% rise in tenant sales per square foot between January to June.
“CLMT will begin the next phase of asset enhancement initiatives (AEI) at Gurney Plaza, revitalising the tenancy mix after refurbishing the entrance driveway and reconfiguring the Sports Direct and USC unit in September 2023.
“Shoppers can anticipate new-to-market offerings and exciting retail concepts once the AEI is completed in 2H24,” the research unit noted.
It added construction work at CLMT’s Glenmarie Distribution Centre (GDC) is on track to be completed in the final quarter of the year (4Q24).
TA Research said CLMT has signed a letter of offer with a reputable international luxury fashion retailer to lease GDC for ten years.
It added: “In accordance with the terms of this agreement, CLMT will undertake a convert-to-suit project, converting the building into a temperature-controlled distribution centre at an estimated cost of RM14.6mil.
“With a gross annual rental revenue of RM3.5mil, the investment yield is projected to be around 6.5%, based on the total investment outlay of RM54.3mil.”
The research house added CLMT is actively seeking yield-accretive investment opportunities, particularly in emerging asset classes like industrial and logistic assets, aiming for these to constitute 20% of the total portfolio in the medium term.
Meanwhile, Kenanga Research observed that CLMT’s 1H24 revenue had grown 23% y-o-y to RM225.5mil, mainly due to the full income recognition of Queensbay Mall during the period, after it was acquired in Mar 2023, on top of positive rental revisions and higher overall occupancy rates at 93.1%.
“Its core net profit rose by a sharper 35% as its operating expenses increased at a slower pace of 10%.
“On a quarterly basis, its 2Q24 revenue inched up 2% while net profit was flattish due to slight disruptions to traffic arising from asset enhancement efforts,” it said.
The research house noted the investment trust appears to be able to raise rental rates for its malls in Penang by as high as 10% as compared to the preceding year but believes the quantum of rental revisions may ease going forward given the competition from two new malls in Penang, namely, Sunshine Mall and Waterfront, slated to open in 2025.
Kenanga Research is keeping a cautious stance on consumer spending particularly from the low-to-mid-income groups due to elevated inflation and subsidy rationalisation.
Both research outfits have posted contrasting calls on CLMT, with TA Research having a “buy” recommendation while Kenanga Research is maintaining its “underperform” call on the counter, on respective target prices of 76 sen and 58 sen a unit.
