Date: October 2, 2024
Broker: Maybank Investment Bank Berhad

Overview
CapitaLand Malaysia Trust (CLMT MK) is a retail-focused REIT with a diversified portfolio of malls across key locations in Malaysia. The trust is known for its high occupancy rates in prime assets such as Gurney Plaza and Queensbay Mall, while also facing challenges in some of its other properties.

Stock Performance and Target Price

• Current Price (CP): MYR0.68
• Target Price (TP): MYR0.70
• Upside: 11%
• Market Capitalization: USD458 million
  CLMT is rated as a BUY with an 11% upside potential. The trust’s strategic assets and consistent performance position it well for continued growth.

Earnings Forecast and Dividend Yields

• 2024 Core Earnings Growth: 15.4%
• 2025 Core Earnings Growth: 15.2%
• 2024 Dividend Yield: 6.5%
• 2025 Dividend Yield: 6.6%

CLMT is expected to achieve steady earnings growth, supported by its strong retail assets and improved performance in key properties. The trust offers attractive dividend yields, making it a solid choice for income-seeking investors.

Occupancy Rates of Key Properties
CLMT’s key properties continue to show strong occupancy, especially its prime assets:

• Gurney Plaza: 99.6%
• Queensbay Mall: 99.2%
• East Coast Mall: 99.3%
• The Mines: 80.6%
• Sungei Wang Plaza: 85.4%
• 3 Damansara: 83.2%

While CLMT’s prime malls like Gurney Plaza and Queensbay Mall maintain high occupancy, some assets like The Mines and 3 Damansara face challenges in achieving higher occupancy due to competitive pressures in their areas.

Retail Segment Outlook
CLMT’s retail properties, particularly Gurney Plaza and Queensbay Mall, benefit from strong tenant demand and high occupancy rates, making them key contributors to the trust’s earnings. However, some of its other assets, such as Sungei Wang Plaza and 3 Damansara, are more prone to occupancy risks due to competition from nearby malls. Overall, the retail outlook remains positive, with projected retail sales growth of 4% in 2024, supported by improved consumer spending and increased footfall driven by tourism.

Debt Profile and Financing Costs

• Total Debt: MYR2.145 billion
• Floating Rate Debt: 14% of total debt
• Gross Gearing: 42%

CLMT has a relatively small proportion of floating rate debt, which limits its exposure to rising interest rates. The trust’s overall debt profile is managed prudently, with a gross gearing ratio of 42%, allowing it to navigate through periods of market volatility.

Investment Thesis
CLMT offers a well-balanced portfolio of retail assets, with its high-occupancy properties in prime locations like Gurney Plaza and Queensbay Mall serving as strong income drivers. While some of its other assets face challenges, the trust’s overall outlook remains positive, thanks to steady earnings growth and attractive dividend yields. CLMT’s limited exposure to floating rate debt further enhances its appeal in an environment of rising interest rates.

This analysis provides a comprehensive view of CLMT’s performance and outlook as of October 2, 2024.