Daiwa is downgrading CapitaLand Mall Trust (CMT) to “hold” from “outperform” after strong YTD share price performance with DPU growth likely to face strong headwinds for 2016-17.
The bank has however raised its target price to $2.18 from $2.12 after raising DPU forecasts on lowering borrowing costs although they are still 4-5% lower than Bloomberg consensus for 2017-18 as it believes the market could be too bullish on CMT’s rental reversion prospects.
Year to date, CMT’s unit price has risen by 12.4% compared to -6.9% for the STI and 2.9% for the FSTREI.
Analyst David Lum says CMT has outperformed because it is the best proxy for the S-REIT sector.
“At this stage, we believe CMT is no longer undervalued, but fairly valued. We note that the DPU growth outlook for 2016-17 is subdued and below the S-REIT sector average. We see the loss of income from Funan DigitaLife Mall (closed for major redevelopment) and Rivervale (divested) and a challenging leasing market as the major headwinds for DPU growth for 2016-17.”
Among the retail S-REITS, Lum now prefers Frasers Centrepoint Trust (Outperform, $1.95 target), Starhill Global REIT (Outperform, 75 cents) to CMT.
As at 9.20am, Capitaland Mall Trust is down 0.46% at $2.15.
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The bank has however raised its target price to $2.18 from $2.12 after raising DPU forecasts on lowering borrowing costs although they are still 4-5% lower than Bloomberg consensus for 2017-18 as it believes the market could be too bullish on CMT’s rental reversion prospects.
Year to date, CMT’s unit price has risen by 12.4% compared to -6.9% for the STI and 2.9% for the FSTREI.
Analyst David Lum says CMT has outperformed because it is the best proxy for the S-REIT sector.
“At this stage, we believe CMT is no longer undervalued, but fairly valued. We note that the DPU growth outlook for 2016-17 is subdued and below the S-REIT sector average. We see the loss of income from Funan DigitaLife Mall (closed for major redevelopment) and Rivervale (divested) and a challenging leasing market as the major headwinds for DPU growth for 2016-17.”
Among the retail S-REITS, Lum now prefers Frasers Centrepoint Trust (Outperform, $1.95 target), Starhill Global REIT (Outperform, 75 cents) to CMT.
As at 9.20am, Capitaland Mall Trust is down 0.46% at $2.15.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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