Diversification likely to buoy CapitaLand

PETALING JAYA: Analysts are positive on CapitaLand Malaysia Trust’s (CLMT) diversification efforts, which are expected to enhance earnings visibility and help mitigate retail sector volatility.

Maybank Investment Bank Research (Maybank IB) said CLMT’s ongoing share placement exercise – aimed at raising up to RM250mil to fund acquisitions and reduce debt – will increase the company’s industrial and logistics exposure to 7.9%, up from 2.8% of its assets under management (AUM).

“Proceeds from the placement (to be completed in the third quarter of financial year 2025 [3Q25]) is expected to partly refinance borrowings for RM400mil of completed and pending logistics/industrial acquisitions, including Glenmarie Distribution Centre (retrofitting completed in January 2025), Senai Airport City, and upcoming assets in Elmina Business Park and Nusajaya Tech Park,” it said.

The research house expects CLMT’s gearing to fall from 44.1% (post-acquisitions) to 39.6% post-placement.

Moving forward, Maybank IB forecasts full contributions from the logistics assets beginning in 3Q25, with annualised gross rental income of RM20mil, or about 4% of revenue for the financial year ending December 2026 (FY26).

CLMT also benefitted from positive rental reversions, and full-quarter income from Glenmarie Distribution Centre (from January 2025) and initial contributions from Senai Airport City from June.

Meanwhile, Kenanga Research anticipates the trust’s positive trajectory to continue into FY25 and FY26, given the promising developments in Penang.

“The group will continue its direction in acquiring and expanding its industrial segment, with a focus on logistics assets as part of its strategy to diversify portfolio income streams.

“Currently, industrial assets make up less than 5% of the group’s net property income (NPI).

“It aims to increase the composition mix from its industrial segment to 20% of its total AUM in approximately three years,” the research house said.

Kenanga Research kept its FY25 earnings forecast for CLMT, noting that the ongoing share placement will likely contribute less than 2% of the group’s total NPI.

However, it increased its FY26 earnings estimate by 8% to incorporate income contribution from the newly acquired Senai Airport City assets and interest savings from the proposed placement.

That said, the resulting dilution is expected to reduce CLMT’s FY26 net dividend per unit to 4.7 sen, down from five sen.