Brokers' take
Compiled by Navin Sregantan
CAPITALAND MALL TRUST (CMT) | HOLD (MAINTAINED)
JUNE 6 CLOSE: $2.57
FAIR VALUE: $2.33
OCBC Investment Research, June 6
CMT announced early this week that Funan will be opening its doors on June 28 - two months ahead of schedule.
Funan is poised to excite shoppers in the Civic District, with more than 180 brands clustered around six passion themes: Tech, Craft, Play, Fit, Chic, and Taste.
Around 30 per cent of its tenants are new-to-market brands and new concept stores or flagships.
According to CMT, Funan has achieved pre-committed occupancy of about 92 per cent for its retail component and 98 per cent for its twin office blocks. Management expects more retail leases to be signed in the coming months.
We raise our FY2019 and FY2020 DPU (distribution per unit) forecasts by 0.5 per cent and 2 per cent respectively, on faster-than-expected ramp up at Funan.
While we see CMT as a defensive shelter amid the ongoing trade tensions given its resilient portfolio and strong track record, we believe these positives have already been priced in.
PROPERTY BROKERAGES | OVERWEIGHT (INITIATE)
CGS-CIMB, June 4
We see the property brokerage business as a lower risk part of the property value chain given its asset-light and segment- agnostic characteristics.
We believe earnings growth will be driven by:
1) organic revenue expansion from a low post-cooling measure base in FY2019,
2) commission rate expansion, 3) bumper new private residential launches,
4) projected transaction volume recovery from upgrader demand, and
5) inorganic growth from increased agent share through strategic alliances and mergers.
We initiate coverage on the property brokerage sector with an "Overweight" rating with APAC Realty (Add, $0.67) and PropNex (Add, $0.64), in this order of preference.
Property brokerage stocks offer investors asset-light, lower-risk exposure to the property sector, with FY2019-2021 earnings per share compound annual growth rate of 4.4 per cent and double-digit return on equity.
We see transaction volume improvement from FY2020, from a low base in FY2019, and rising commission rates to bolster earnings recovery from FY2020.
Key catalysts for the sector include an improvement in residential transaction volumes, while a downside risk would be a compression in commission rates.
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision.
The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
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