Maybank in its analysis of CapitalLand Malaysia Trust said the 1H24 core net profit and 1st interim gross DPU of 2.36sen were in-line, at 51%/53% of The consensus full-year estimates. The higher YoY earnings in 2Q24 were mainly due to positive rental reversions and higher occupancies. No change to earnings forecasts. The house maintains a BUY call with unchanged DDM-TP of MYR0.70 (Ke: 8.6%). FY24E net DPU yield is attractive at 6.7% (sector average: 5.7%).

2Q24 core earnings was MYR33.5m (+19% YoY, flat QoQ), taking 1H24 core net profit to MYR67m (+39% YoY). 2Q24's YoY core earnings growth was largely due to: (i) positive retail rental reversion of +8.7% (ex-Klang Valley malls: +10.2%, Klang Valley malls: +1.7%), and (ii) higher portfolio occupancy, rising to 93.1% (2Q23: 88%). Notably, occupancies of the three
key malls (Gurney Plaza, Queensbay Mall and East Coast Mall) were above 99%. Bottom-line earnings, however, were partly offset by higher finance costs (+11.4% YoY) due to the OPR hike in May 2023 and higher refixing rates for certain fixed rate loans (average cost at 4.6% vs 2Q23: 3.96%).

For 1H24, CLMT's same-store shopper traffic and tenant sales growth were at +6.5% and +6.6% YoY, respectively. Distributable income for 1H24 was MYR66.9m (+38% YoY).

Exploring yield accretive industrial assets
Elsewhere, management continues to explore yield-accretive industrial/logistics assets as part of its strategic initiatives to enhance portfolio returns. Currently, CLMT owns two logistics assets (Valdor Logistics Hub and Glenmarie Distribution Centre), valued at MYR123.2m (or 2.5% of total AUM). Also pending is the acquisition of three freehold industrial properties located in Nusajaya Tech Park in Iskandar Malaysia, Johor, expect to complete in 4Q24 (purchase price of MYR27m).
FY24E earnings on track

The FY24-26E earnings forecasts are unchanged whereby Maybank expects +22.4% EPU growth in FY24E, mainly from full year contribution of QBM.