CapitaLand Malaysia Trust (CLMT) reported that its first half of Fiscal Year 2024 (1HFY24) core net profit and distribution per unit (DPU) met expectations, buoyed by strong performance from Queensbay Mall (QBM) and Gurney Plaza. The group's revenue grew 23% year-on-year (YoY), largely due to the full income recognition from QBM, while occupancy rates improved to 93.1% from 88.0% the previous year. The retail assets in Penang continue to drive portfolio income, mitigating weaker performance from Klang Valley assets.

Kenanga Investment Bank (Kenanga) has maintained an UNDERPERFORM rating on CLMT, with a target price of RM0.58. The report highlights that while Penang malls are performing well, the company faces challenges in the Klang Valley due to competition from newer, more upscale malls. CLMT's 1HFY24 results reflected a core net profit of RM67.0 million, meeting 55% of the full-year forecast, with a net distribution of 1.05 sen. Despite a 2% quarter-on-quarter (QoQ) revenue increase, net profit remained flat due to traffic disruptions from asset enhancement efforts.

The outlook for CLMT indicates potential for continued rental growth in Penang, with increases up to 10% anticipated. However, the competitive landscape with new malls set to open in 2025, coupled with cautious consumer spending, poses risks. Kenanga's target price reflects a target yield of 7.5%, accounting for the group's low-yielding assets in Klang Valley. Given the higher yield spread applied compared to sector peers, CLMT's performance is expected to remain subdued in the near term.