PETALING JAYA: Analysts are positive on Capitaland Malaysia Trust’s (CLMT) recent acquisition of an industrial property in Elmina Business Park, Sungai Buloh for RM180mil, as it will enhance its yield and provide it with a stable income.

“Given the current trend of yield compression in the industrial space, we are positive on the acquisition which is able to offer 6.7% yield, underpinned by a term of 10-year lease that allows the group to see long-term stable income,” Kenanga Investment Bank Research said.

The research house said the lessee, Projek Tetap Teguh Sdn Bhd, will lease the property for 10 years with an option to renew for another two terms of five years each.

It added that the acquisition is in line with CLMT’s aspired acquisition net property income yield target of 6% and above.

“We estimate CLMT to be able to generate a net increase of RM3.6mil profit before tax annually to its portfolio.

“This will also raise the group’s net gearing from 0.42 times to 0.44 times, which is still below the 0.5 times gearing limit prescribed by the Securities Commission for listed real estate investment trusts,” Kenanga Research noted.

The research house has maintained its earnings forecasts and target price of 70 sen but upgraded its call to “outperform” from a “market perform” call, as CLMT’s dividend yield is now leading its sector coverage at 6% to 7% against the average of 5% to 6%.

It has kept its earnings forecasts, given completion date targeted in the fourth quarter ending Dec 31, 2025.

Similarly, TA Research viewed this acquisition positively as it aligns with CLMT’s growth strategy and diversification efforts.

It pointed out that the addition of the Elmina Logistics Hub will expand CLMT’s portfolio to 11 properties and double the proportion of its new economy assets from 3% to 6% of its total portfolio by assets under management.

“We estimate that this acquisition will lead to a slight increase in CLMT’s gearing ratio, from 42.1% at the end of September 2024 to 44.1%.

“Assuming a net property income margin of 85% and lease commencement in October 2025, the proposed acquisition is projected to boost our earnings forecasts by 1.8% in financial year 2025 (FY25) and 6.5% in FY26.

“However, we maintain our current earnings forecasts until the deal is finalised.”

The research house has maintained its “buy” recommendation with an unchanged target price 82 sen, based on a target yield of 6.25%.

Source: TheStar, 04 Dec 2024