Why CLMT intrinsic value is RM0.80:

The intrinsic value of RM0.80 is based on 0.79x Price-to-Book (P/B) ratio of its FY25 estimated RM1.01 net book value. I am using the long term average P/B to derive 0.79x. CLMT's robust performance this quarter underscores its resilience and growth potential in Malaysia's REIT sector.

Key Highlights from 4Q2024:

• Revenue Growth: Gross revenue increased by 10.6% YoY to RM120.0 million, driven by higher occupancies and rental reversions across the portfolio.

• Net Property Income (NPI): Improved by 15.0% YoY to RM72.5 million, showcasing effective cost management despite a 4.4% rise in operating expenses.

• Distributable Income: Grew by 7.7% YoY to RM35.2 million, translating into a Distribution Per Unit (DPU) of 1.22 sen for the quarter.

• Strategic Expansion: The acquisition of a logistics property in Sungai Buloh highlights CLMT's pivot towards industrial assets for yield enhancement.

Five Reasons to consider CLMT in a portfolio:

1. Strong Portfolio Diversification:

   CLMT's portfolio spans retail and logistics assets, with flagship properties such as Gurney Plaza and Queensbay Mall delivering stable contributions. The strategic inclusion of logistics assets like Valdor Logistics Hub offers diversification benefits and long-term growth prospects.

2. Resilient Operational Metrics:

   The portfolio demonstrated robust performance, with notable improvements in key assets. For instance, Queensbay Mall's revenue surged 8.5% YoY, while East Coast Mall and Valdor Logistics Hub posted impressive growth of 12.4% and 31.5%, respectively.

3. Attractive Valuation:

   Trading at a market price of RM0.68, CLMT offers a compelling 19% upside to its intrinsic value of RM0.80. Additionally, its current P/B ratio of 0.68x is below the sector average, signaling undervaluation.

4. Strategic Growth Initiatives:

   Recent acquisitions, including the logistics property in Elmina Business Park, align with CLMT's strategy to expand its industrial footprint. This shift mitigates retail reliance and taps into the thriving e-commerce sector.

5. Improving Economic Environment:

   Malaysia’s GDP growth (5.3% in 3Q2024) and strong retail industry momentum (3.9% FY2024 growth) bode well for CLMT’s retail assets. Projected retail and logistics sector growth further supports CLMT's trajectory.

Conclusion:

CLMT remains a compelling investment in the Malaysian REIT space, backed by its diversified portfolio, resilient operational performance, and strategic growth initiatives. At a current yield of 6.8% (annualized DPU of 4.85 sen), CLMT offers an attractive entry point for income-focused investors seeking exposure to Malaysia’s dynamic property market.

Company Background

CapitaLand Malaysia Trust (CLMT) is a diversified Malaysian real estate investment trust (REIT) managing retail and logistics properties. Its portfolio includes prime assets like Gurney Plaza and Queensbay Mall, along with logistics hubs, offering steady income and growth potential. CLMT focuses on enhancing yields through strategic acquisitions and operational efficiency.