KUALA LUMPUR: MIDF research maintained its neutral call on CapitaLand Malaysia Mall Trust , whose 1QFY19 earnings came in slightly below the research house's expectations.

The research house lowered its target price on the stock to RM1.05 from RM1.08 previously.

"Earnings revised by -2.5%/-2.5% for FY19F/FY20F respectively. 

"Following which, our new earnings estimates are RM136.5m/RM144.7m. This is to factor in higher than expected property expenses as well as later than expected contribution from Jumpa," it said.

In an note, MIDF reported that CMMT's 1QFY19 core net income of RM32.5mil came in at 23% of its estimates and 22.5% of consensus while its dividend of 1.71 sne per share was also slightly below its expectations.

"CNI for the quarter fell year-on-year mainly due to maintenance expenses that increased by +20%yoy and utilities expenses that climbed +8%yoy. 

"The higher operating expenses can also be attributed to the absence of a one-off service charge rebate at Sungei Wang Plaza (SWP)," it said.

Revenue fell from declines in SWP, 3 Damansara and The Mines while topline contribution from Gurney Plaza and East Coast Mall helped to mitigate the fall.

Measnwhile, CMMT's management has guided that prospective tenants have committed to about 50% of "Jumpa's" net lettable area. It is set to open in 3Q, slightly delayed from the 1HFY19 timeline MIDF had expected.

"They have managed to secure three out of five mini anchors and targets to secure another mini anchor in the near term. 

"Some of the committed tenants are “Camp 5”, “Love, Bonito”, “Miniature”, “Ah Yip Herbal Soup” and “Japanese Curry Noodle and
Udon”."

MIDF is positive on CMMT's initiatives to refresh its malls but expects them to take some time before they translate into positive earnings.