Analysts see muted earnings outlook for CMMT

KUCHING: Capitaland Malaysia Mall Trust’s (CMMT) first nine months of the financial year 2017 (9MFY17) core net income of RM120.2 million came slightly below expectations and hence, analysts pegged a muted outlook on the mall operator.

In a report, the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research) reduced its earnings forecast on for FY17 forecast (FY17F) by 1.2 per cent due to the lower-than expected rental reversion.

It noted that year to date ( YTD), core net income declined two per cent year- on-year (y- o-y) to RM120.2 million.

“CMMT’s 9MFY17 core net income came in lower due to lower NPI from its Klang Valley assets. Negative rental reversion was seen for The Mines (down 5.4 per cent) and Sungei Wang Plaza (SWP) (-23.2 per cent) for 9MFY17,” it pointed out.

However, it said, East Coast Mall and Gurney Plaza saw positive rental reversion of four and one per cent respectively. Excluding SWP, it said, CMMT’s rental reversion YTD registered a 0.7 per cent improvement.

In the third quarter of FY17 (3QFY17), CMMT’s core earnings of RM40.1 million was four per cent lower y- o-y due to the decline in NPI of SWP (down 37 per cent y- o-y), The Mines (down seven per cent y- o-y), and Tropicana City property (down five per cent y- o-y).

“The drop in earnings from The Mines was due to lower occupancy rate and lower rental rates while the decrease in income at Tropicana City property was due to lower occupancy at the office tower,” it explained.

All in, MIDF Research said, the earnings downside from SWP is limited due as its latest contribution to CMMT’s NPI is just under seven per cent (from eight per cent in 1HFY17).

It also noted that shopper traffic at SWP has also improved with the opening of entrance at the MRT station. THE Kuala Lumpur Tin Market ( KLTM) ended firmer at US$ 19,950 a tonne yesterday on better demand for the commodity.

A dealer said the local market was also in line with the better overnight performance of tin on the benchmark London Met a l Exchange ( LME).

The LME tin price finished US$ 115 higher at US$ 19,890 a tonne.

The dealer said buying suppor t was seen from China, Sout h Ko r e a , Japan and Taiwan, with one local seller.

At the opening bell, bids were at 25 tonnes and offers at 21 tonnes, while turnover fell to 21 tonnes from 29 tonnes on Wednesday.

The price di f ferent ial between the KLTM and the LME was at a premium of US$ 60 a tonne against a premium of US$ 25 a tonne previously.