Above expectations; maintain HOLD
4Q21 core net profit and final gross DPU of 0.98sen (FY21: 1.84sen) were above expectations due to better-than-expected rental income. Overall, its FY21 earnings were affected by negative rental reversions across its retail portfolio and lower occupancy rates, causing its core net profit to decline 34% YoY. We remain cautious on Sungei Wang Plaza which could limit near term earnings growth. We tweak our FY22/23E by 3% p.a. which results in a lower DDM-TP of MYR0.57. Maintain HOLD.
Supported by Gurney Plaza and East Coast Mall
Excluding revaluation loss of MYR76.4m, 4Q21 core net profit was MYR16.9m (+9.7% YoY, +2.8% QoQ), brought FY21 core net profit to MYR37.3m (-34% YoY). This constitutes 112%/94% of our/consensus’ FY21
estimates. 4Q21 NPI was only marginally lower YoY to MYR33.2m (-2.4%), partly supported by sustained occupancy rates at Gurney Plaza (96.3%) and East Coast Mall (97.5%), as well as lower financing costs (-14%). For FY21, CLMT’s retail portfolio recorded a negative rental reversion of 13.4%.
Lowered near-term growth
Sungei Wang Plaza has continued to drag the portfolio as it had a negative rental reversion of -45.7% in FY21 and occupancy fell to 66%. We have reduced our FY22/23E forecast by 3%/3% after adjusting for FY21 results and revising our rental income forecasts. Subsequently, our DDM-based TP was lowered by 3sen to MYR0.57 (Ke: 9.5%) as we also rolled forward our valuation base to FY22. We have also introduced our FY24 forecasts.
Active lookout for inorganic growth
Looking forward, CLMT’s investment growth is expected to extend beyond the retail sector i.e. commercial, office and industrial asset classes. Negative rental reversion is expected to continue to spill over into FY22, where Sungei Wang Plaza’s rental income growth will remain muted in the near-term. However, in the long-run CLMT’s portfolio is still backed by its outstation malls i.e. Gurney Plaza and East Coast Mall.