Broker: Maybank Investment Bank Berhad
Date of Report: June 4, 2025

CapitaLand Malaysia Trust: Placement to Fuel Logistics Growth and Strengthen Balance Sheet

Overview: Strategic Placement to Drive Future Growth

CapitaLand Malaysia Trust (CLMT MK) has announced a significant private placement, aiming to issue up to 435.4 million new units to raise MYR250 million. While the move introduces a short-term dilution to earnings per unit (EPU) and distribution per unit (DPU) for FY25E—by approximately 6%—the outlook beyond 2025 is notably positive. The placement is expected to reduce net gearing, unlock savings from lower interest costs, and enable full-year earnings from new logistics assets. As a result, net profit forecasts for FY25/26/27 have been raised by 8%, 18%, and 18% respectively.
Despite higher earnings, the DDM-based target price increases only slightly to MYR0.76 from MYR0.75, reflecting the enlarged share base post-placement. CLMT stands out with attractive forecasted net DPU yields of 6.7% and 7.3% for FY25 and FY26. The recommendation remains a firm BUY.

Placement Details and Impact on Gearing

The proposed MYR250 million placement will include allotments to major unitholders with stakes exceeding 5% and 10%, pending required approvals. An Extraordinary General Meeting (EGM) date will be announced shortly. The capital raised will be allocated as follows:

• MYR246.1 million to repay borrowings
• MYR3.9 million for placement-related expenses

Completion is expected by Q3 2025. Post-acquisition, net gearing is projected to rise to 44.1% (from 41% in 1Q25), but will fall to 39.6% after the placement, improving balance sheet strength and providing headroom for future yield-accretive acquisitions.

Logistics Expansion: A New Growth Engine

Placement proceeds will partially refinance borrowings tied to around MYR400 million in completed and pending logistics and industrial acquisitions. Key assets include:

• Glenmarie Distribution Centre (retrofitting completed January 2025)
• Upcoming facilities in Elmina Business Park, Nusajaya Tech Park, and Senai Airport City (completion in 2H25)

These assets are projected to add about MYR20 million in annual gross rental income—equivalent to roughly 4% of FY26E revenue.

Transforming Asset Mix and Earnings Visibility

Following these acquisitions, CLMT’s exposure to industrial and logistics assets will increase from 2.8% to 7.9% of assets under management, with these segments expected to account for approximately 9% of FY26E net property income (NPI). The core retail portfolio remains resilient, with steady occupancy and rental reversions anticipated in the mid- to high-single-digit range, especially for ex-Klang Valley malls.
Despite the near-term dilution from the placement, the long-term outlook is supported by enhanced earnings visibility, increased diversification, and improved gearing.

Shareholder Structure and Financial Statistics

Key statistics and shareholder breakdown:

• 52-week high/low: MYR0.70/MYR0.60
• 3-month average turnover: USD 0.2 million
• Issued shares: 2,921 million
• Market capitalization: MYR 1.9 billion (USD 437 million)
• Free float: 83.3%

Financial Performance and Forecasts

Asset Portfolio: Completed and Upcoming Logistics Investments

Earnings Revisions and Key Assumptions

The placement and logistics expansion have prompted notable upward revisions to CLMT’s earnings forecasts:

• FY25E revenue revised to MYR472.5 million (+1.8%)
• FY26E revenue revised to MYR488.7 million (+4.4%)
• FY27E revenue revised to MYR493.2 million (+4.3%)
• FY25E core net profit revised up by 8% to MYR154.6 million
• FY26E core net profit revised up by 18.3% to MYR170.5 million
• FY27E core net profit revised up by 18.0% to MYR172.7 million

Key rental income contributions from new logistics assets are factored in:

• Nusajaya Tech Park: MYR2.1 million annually from FY26E
• Elmina: MYR13.0 million annually from FY26E
• Senai Airport City: MYR5.4 million annually from FY26E

Valuation Update: DDM-Based Target Price

The Discounted Dividend Model (DDM) target price has been adjusted as follows:

• Total NPV post-placement: MYR2,540.4 million
• Enlarged share base: 3,327 million shares
• DDM-based target price: MYR0.76/share
• Cost of equity: 8.3%
• Dividend terminal growth: 1%

Risks and Investor Considerations

Investors should note several risk factors:

• Changes in rental and occupancy rates, operating expenses, and interest rates could impact earnings.
• 31% of gross rental income is up for renewal in 2025; 15% of debt is on floating rates.
• Potential pandemic-related disruptions to mall footfall remain an earnings risk.

Key Financial Ratios and Metrics

• Net property income margin is forecast to improve from 59.2% in FY25E to 60.7% by FY27E.
• Payout ratio rises to 85% in FY25E and 90.9% in FY26E and FY27E.
• Net interest cover expected to strengthen from 2.6x in FY25E to 2.8x in FY27E.
• Debt/Assets ratio reduces to 0.40 from 0.42 over the forecast period.

Conclusion: Strong Long-Term Prospects

CapitaLand Malaysia Trust’s strategic placement and logistics expansion position it for sustainable long-term growth. The short-term dilution is outweighed by the improved earnings outlook, diversification, and strengthened balance sheet. With robust DPU yields and a higher DDM-based target price, CLMT remains an attractive proposition for investors seeking yield and growth in the Malaysian REIT sector.

About the Broker

Maybank Investment Bank Berhad remains a leading source for regional market research, providing insights across Malaysia, Singapore, Thailand, Indonesia, the Philippines, Vietnam, Hong Kong, India, and London, with a comprehensive team of sector specialists.