CapitaLand Malaysia Trust surges to near four-year high after strong 1Q

• So far this year, CLMT has gained 17%, sharply outperforming its peers, buoyed by potential earnings contributions from its newly-acquired industrial properties. Bursa Malaysia REIT Index, which tracks 19 real estate investment trusts, have gained 6.4% year-to-date.

KUALA LUMPUR (April 25): Shares of CapitaLand Malaysia Trust (CLMT) surged on Thursday to its highest in nearly four years while analysts remained upbeat following better-than-expected first-quarter (1Q) results.

CLMT surged as much as four sen or 6.4% to 66.5 sen, its highest since June 2020. At 4pm, the counter pared some gains to trade at 66 sen, still up 3.5 sen or 5.6%, valuing the group at RM1.86 billion. More than 9.6 million shares changed hands, four times the 90-day moving average of 2.02 million shares.

Maybank Investment Bank upgraded its call to "buy" and expects earnings growth to sustain in coming quarters. Earnings per unit may increase 22.4% in FY2024 mainly from the full-year contribution of Queensbay Mall, the research house noted after raising the earnings forecast by 10% for FY2024.

So far this year, CLMT has gained 17%, sharply outperforming its peers, buoyed by potential earnings contributions from its newly-acquired industrial properties. Bursa Malaysia REIT Index, which tracks 19 real estate investment trusts, have gained 6.4% year-to-date.

There are now two "buy" calls for CLMT, including Maybank IB’s, and four "hold" calls. The consensus 12-month target price is 64sen.

Net property income surged 63% in the first quarter ended March 31, 2024 (1QFY2024) to RM63.98 million from a year earlier, driven by full-quarter revenue contribution from Queensbay Mall, higher occupancies, and positive rental reversions.

The 1Q results accounted for 28% of consensus full-year forecasts. This year, analysts are predicting net profit of RM123.75 million, according to Bloomberg.

Meanwhile, a proposed income distribution of 1.19 sen per unit is on track to meet Kenanga Investment Bank’s projection for 4.4 sen full-year.

The research house, which has the trust on "market perform" equivalent to "hold", said Queensbay Mall is expected to continue to drive overall portfolio performance and cushion the weakness from its retail assets in the Klang Valley facing intense competition.

CLMT’s “less prime asset profile amid weakened consumer spending and the influx of new malls may put a strain” on Sungei Wang and 3 Damansara malls, Kenanga added.

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