Review

• Excluding a RM57.2mn fair value gain on investment properties and other non-core items totalling a loss of RM2.5mn, CapitaLand Malaysia Trust (CLMT) delivered a realised net profit of RM132.6mn for FY24, reflecting a robust 19% YoY growth. The results met expectations, achieving 101% and 102% of our and consensus full-year forecasts, respectively.

• FY24 distribution per unit (DPU) rose by 12% to 4.65sen, translating to an attractive dividend yield of 6.9% based on the last closing price.

• FY24 net property income (NPI) increased by 21% YoY to RM263.9mn, largely driven by a full-year contribution from QueensBay Mall (QBM) following its acquisition completion towards the end of 1Q23. Additionally, other malls in CLMT's portfolio reported improved gross revenue, driven by higher occupancy rates and positive rental revisions.

• Finance costs jumped 16% YoY in FY24, primarily due to increased borrowings utilised to partially finance the QBM and Glenmarie Distribution Centre (GDC) acquisition. The increase was also driven by higher floating rates following the May 2023 OPR hike, as well as refixed rates on certain maturing fixed-rate loans.

• Realised net profit grew 17% QoQ to RM35.4mn in 4Q24, mainly supported by stronger performance across all retail assets during the year-end festive season. Additionally, GDC made its maiden contribution following its completion in November 2024.

• As of 31 December 2024, CLMT's portfolio occupancy was 92.8%, with malls outside the Klang Valley performing exceptionally well, achieving over 99% occupancy. The retail rental reversion for CLMT's portfolio in FY24 was +11.3%, showing sustained improvement from FY23's +7.5%.

• In terms of lease expiry, 38%, 28%, 26% and 8% of CLMT’s leases by gross rental income are due for renewal in 2025, 2026, 2027 and 2028 & beyond, respectively, as at 30 September 2024.

Impact

• We marginally tweak our FY25 and FY26 earnings forecasts to reflect the actual FY24 results and incorporate housekeeping adjustments.

Conference Call Highlights

• The introduction of new retail concepts, enhanced tenant offerings, and targeted shopper activation programs across CLMT's malls drove a 4.7% YoY increase in shopper traffic and a 4.2% rise in tenant sales per square foot in FY24. Building on this robust retail performance, management has expressed optimism, projecting mid- to high-single-digit rental reversions for 2025.

• CLMT enhanced its retail appeal in 2024 through four phased AEIs at Gurney Plaza, adding ~3,500 sq ft of NLA and introducing refreshed concepts, including new-to-market and expanded beauty brands on Level 4. Meanwhile, the refurbishment of Queens Hall elevated the food court at QBM with trendier architectural finishes, improved lighting, and clear colour zoning with updated signage.

• CLMT has strengthened its logistics segment with the proposed acquisition of a modern logistics property in Sungai Buloh, Selangor, for RM180.0mn, equipped with an advanced automated storage and retrieval system. Additionally, the RM27.0mn acquisition of three freehold industrial factories in Nusajaya Tech Park, Johor, is expected to be completed in 2H 2025. Moving into 2025, CLMT remains committed to pursuing further yield-accretive industrial property opportunities.

Valuation

• We maintain our Buy recommendation with an unchanged TP of RM0.82, based on CY25 target yield of 6.2%. TP also includes a 3% ESG premium, reflecting CLMT's 4-star ESG rating. Maintain Buy.

Source: TA Research - 23 Jan 2025