CapitaMall Trust Resilient But 3Q2017 DPU Is Flat

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CapitaMall Trust announced its 3Q2017 financial results today. I am pleased that CapitaMall Trust manage to maintain its Distribution Per Unit of 2.78 cents which is the same as 3Q2016. This is despite gross revenue actually fell by a minor of 0.2% for 3Q2017 as compared to the same quarter in 2016.

In my previous post, I wrote about the resiliency of CapitaMall Trust and till date, my opinion still holds. Almost every retail REIT listed on the Singapore Exchange is facing the economic headwinds and suffering from the impact of the growing popularity of online shopping. The fact that CapitaMall Trust is able to almost maintain its DPU was a pleasant surprise for me.

However, the fact that the DPU remains flat means CapitaMall Trust is also facing difficulties to grow the value of its assets further. The YTD September 2017 shopper traffic increased by a mere 0.2% Y-o-Y as compared to September 2016. This is despite my observation that CapitaMall introduces customer loyalty program such as partnering with American Express Credit Card to offer 5 times rewards points and shoppers can exchange accumulated reward points for CapitaMall vouchers.

3Q2017
(S$’000)
3Q2016
(S$’000)
Change
Gross Revenue 169,405 169,664 (0.2%)
Net Property Income 121,365 119,507 1.6%
Distributable Income 98,680 98,369 0.3%
Distribution Per Unit (“DPU”) (cents) 2.78 2.78 0%

Based on the YTD results, gross revenue actually fell by 2% which CapitaMall Trust claims it was due to the closure of Funan for redevelopment.

YTD 2017
(S$’000)
YTD 2016
(S$’000)
Change
Gross Revenue 510,067 520,386 (2.0%)
Net Property Income 358,976 363,487 (1.2%)
Distributable Income 292,891 292,254 0.2%
Distribution Per Unit (“DPU”) (cents) 8.26 8.25 0.1%

I like the way CapitaMall Trust is introducing popular brands to attract more shoppers like Haidilao Hot Pot at Bedok Mall, Ah Mah Homemade Cake at Bukit Panjang Plaza and Original Cake at Westgate.

While CapitaMall figures out whether these brands can attract back the shoppers who prefer to stay at home to shop online, I am happy to hold on to my holdings of CapitaMall Trust for the dividend yield of 5.5%. If the opportunity arises and the stock price retraces back to S$1.94, I will be happy to increase my position.

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