KUCHING: CapitaMalls Malaysia Trust’s (CMMT) net profit forecast for financial year 2012 (FY12) and FY13 have been bumped up 5.2 per cent and 4.8 per cent on the back of a private placement of 261.9 million new units.

With a recently announced issue price of RM1.26 per unit, the gross proceeds amounting to RM330 million would instrumental to the real estate investment trust’s (REIT) plans to fund the acquisition the East Coast Mall in Kuantan, Pahang.

ECM Libra Investment Sdn Bhd analyst, Bernard Ching commented, “The quantum of equity fund raised exceeded our expectation as it implies that East Coast Mall will be 100 per cent funded by equity which will result in larger than expected earnings per unit (EPU) dilution.

“While FY12 and FY13 net profits will be raised due to lower interest expense, EPU for FY11 to FY13 will be cut between 3.6 per cent and 7.5 per cent as the effect of dilution outweighs savings on interest expense.”

ACQUIRING MORE: The pure retail property REIT player with a market capitalisation of RM1.96 billion currently owns Gurney Plaza, an interest in Sungei Wang Plaza and The Mines, with a total lettable area of two million square feet.

The pure retail property REIT player with a market capitalisation of RM1.96 billion currently owned Gurney Plaza, an interest in Sungei Wang Plaza and The Mines, with a total lettable area of two million square feet.

“The larger than expected issue size of the private placement, representing 17.5 per cent of existing number of units in circulation, will reduce gearing and borrowing cost.

“Post private placement, the debt to total asset ratio will decline from 33 per cent as of September 30 this year to approximately 30 per cent. We continue to like CMMT for its exposure to retail investment properties which we believe is resilient,” Ching opined.

He noted that the issue price of RM1.26 translated to a 3.8 per cent discount to last traded price of RM1.31.

Using a dividend discount model derivation method, Ching pegged CMMT’s target price at RM1.43, implying a FY12 distribution yield of 5.3 per cent.