Kenanga Research noted that the real estate investment trust's (REIT) 1HFY21 realised distributable income of RM18.2mil came within its forecast at 45% of its full-year projection but was only 26% of consensus full-year estimate due to weaker-than-expected top-line.
It added that due to the worsening impact of the Covid-19 pandemic in the Klang Valley, there are expectations that CapitaLand Malaysia Mall Trust will be impacted by rental relief efforts in 3Q.
According to the research house, the outlook for non-prime retail remains challenging in the Klang Valley thus far in FY21 although it acknowledged that recent efforts to speed up the daily vaccination rate would aid in recovery, projected for 4Q.
"FY21 will see a large number of leases up for expiry at 41% of NLA which is risky in a challenging year, but the bulk of these expiries are in
its non-Klang Valley based malls (at 61% of total, namely Gurney Plaza and East Coast Mall which are less affected by Covid-19 at this juncture).
"The Group will be looking to diversify its asset class beyond retail possibly targeting industrial, and office assets," said Kenanga.
The research house maintained "market perform" and a target price of 58 sen on FY22 forecat gross dividend per unit of 4.7 sen and an unchanged 4.5 percentage point spread to its 10-year MGS target of 3.6%.
"The applied spread is the highest among retail MREITs under our coverage (1.0ppt to 1.6ppt) given the weakness of CMMT’s asset profile from negative reversions as CMMT does not own any prime retail malls unlike its peers, making it tougher to weather this pandemic while the concern of retail space oversupply still lingers," said Kenanga.