Capitaland Mall Trust Results Review (Q12016)

CapitaLand Mall Trust released its Q1 2016 yesterday.

1st Key Metric: Funds from Operations Per Share (FFOPS)
To assess Reits/Trusts, a very important metric to use is Funds from Operations(FFO) as it measures the profitability of the reit/stock after taking into account of depreciation and gains from disposal of assets. Funds from operations is a much more reliable metric to assess how well the trust/reit is doing.

The formula : Net income - Interest income + Interest expense + Depreciation- Gains on asset sales + Losses on asset sales = Funds from operations 
For CapitaLand Mall Trust, FFOPS:
1Q2015: 0.0297
1Q2016: 0.0317
There is an improvement of about 6%

2nd Key Metric: NAV Per Share
The NAV of a company is its Assets minus liabilities, divided by the outstanding number of shares, we get the NAV per share. It is the 'book value' of a stock. If the market price of the stocks is below the NAV, it may mean a good opportunity to buy the stock.

Current NAV (1Q2016): $1.88
Current Stock price: $2.17
Premium: 15%

Earnings implication- Saved by Bedok Mall

 

 

1. The revenue of Bedok Mall- $14.6m attributed mainly to the increase in revenue. This means that if CMT did not acquire Bedok Mall, its revenue would have been $152.7, a decrease as compared to 1Q2015 which inherently means the other malls are not faring as well. The improvement of IMM by $1.3m can barely save all the other malls.

This is why for a reit to grow, it is important to acquire new assets and improve on the existing ones.

 

2. Other assets- Jcube, Sembawang Shopping Centre, Clarke Quay, The Atrium @ Orchard are performing worse.

 

 



Looking at this chart, retention rate for:

Clarke Quay: 66.7%

The Atrium: 44.4%

Other assets (Jcube and Sembawang shopping centre): 71.4%

 

Not a very good sign..

This also means that Heartland malls are doing much better, which Frasers Centrepoint Trust is very strong at.

 

Overall- Will not buy now.

Better than expected performance results, DPU also increased. But the current price of $2.17 sets a premium of 15% to its NAV value.

 

Not a good bargain.

 

I am also cautious of how the other malls are doing in future especially Clarke Quay, Jcube, Orchard.

 

Bedok mall cannot save the day, all the time.





Recent Action- Sold Capitamall Trust

I sold CapitaMall Trust today and as such, I will not be entitled to its dividends.(ex- dividend date 28.10.15) After factoring this opportunity cost, I still think that at $2.06, it has reached its potential. I shall reap my profits now and gain entry again perhaps next year.

Looking at its 3Qtr 2015 financial report, below are my takeaways:

1. Net property income dropped.
Net property Income has dropped again, consecutively since 2Qtr 2015. The drop is about 0.7%. I expect that it will continue to drop until the 3 malls which are not faring well now brushes up in its rentals.

2. 3 main properties facing a drop in rental income:
IMM
Rental was affected due to renovation works but a link bridge to Devan Nair Institute is completed. Only after all renovation works done and the mall is fully operating then the property income will increase.

JCube
This is a headache.. seriously.
With three shopping malls at Jurong East, west siders are spoilt for choice. Jcube is also very out of the way for shoppers and most of the time, I do not make any effort to go there at all as it is really inconvenient. Furthermore, the toilets stink. The most disgusting toilets are awarded to Jcube, like seriously. Lol.

Anyway, recently there is a revamp at Level 2- a mini Bugis street look alike. I find that appealing since there are many clothes to shop and it really belongs to a league of its own- teenagers. The ice skating rink is a good attraction too.

Clark Quay
After the liquor laws kick in, Clark Quay has become much quieter than before. Previous tenants like MOF are no longer operating. Some clubs are finding it tough to survive too.

Good news is that Zouk will be renting a place here but that will only start in June 2016.

I expect that the rental incomes of these 3 properties will only start to improve in 2016 onwards which translate to weaker income for 4th Qtr 2015 and 1st Qtr 2016. Before I see this stock price dropping, let me sell it first.

3. I expect Finance cost to increase.
Finance costs for YTD Sept 2015 was lower due to low interest rates in Aug 2014, Nov 2014 and Feb 2015. However, moving on to the next Qtr, I believe that the interest rates have risen quite a bit and that will translate to higher finance costs.

4. Good move to buy Bedok Mall
Bedok Mall's business is buoyant and there is high human traffic. However, I do not think that this mall alone will be able to salvage the other three dropping incomes.

5. Better opportunities for my $
Frasers Centre Point trust is certainly doing much better. Almost all of the surb-urban malls enjoy good human traffic. The recent financials are good too.

I will accumulate my war chest by cashing out CMT and divest to other better performing stocks now.

As for CMT, let it sort out the ailing 3 mallsand I will make an entry again probably next year.

CapitaMall Trust Financial Results 1st Qtr 2015 Stock Review

Capitamall Trust has released their 1st Qtr 2015 Financial Results. Trusts and Reits are a good source of dividends as they have rather consistent payouts.  However, their stock prices do not fluctuate much so do not expect much capital gains.

Most buy Trusts and Reits to park money into it and leave it there for a long long time. They then enjoy the dividends payout and return of about 4.7% which is pretty good.

Anyway,a good sign that Capitamall Trust's Net property income has increased by 3% and DPU (Distribution per unit) is 2.68cents per share (annualized as 10.87 cents) which means it has increased.

Their shopping malls such as Plaza Sing, IMM, Junction 8 are always packed with people and have high occupancy rates.  Well I enjoy shopping and I tend to think that Singaporeans will continue to shop during weekends as long as the economy is not facing a drastic recession.  Look, there aren't many places to go in Singapore and with Singapore's very hot climate, I would think that majority of the people prefer air conditioned places like Shopping Malls.

Yes, I think can buy, ideally at $2.21 (today's lowest price).