CapitaLand Mall Trust (SGX:C38U) just released its latest quarterly results and things are looking bullish. CapitaLand Mall Trust delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting S$114m, some 18% above indicated. Statutory EPS were S$0.19, an impressive 50% ahead of forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the consensus from CapitaLand Mall Trust’s 14 analysts is for revenues of S$662.8m in 2020, which would reflect a chunky 8.3% decline in sales compared to the last year of performance. Per-share earnings are expected to soar 70% to S$0.082. In the lead-up to this report, the analysts had been modelling revenues of S$668.0m and earnings per share (EPS) of S$0.087 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at S$2.32, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic CapitaLand Mall Trust analyst has a price target of S$2.90 per share, while the most pessimistic values it at S$1.75. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 8.3% revenue decline a notable change from historical growth of 2.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% next year. It’s pretty clear that CapitaLand Mall Trust’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that CapitaLand Mall Trust’s revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for CapitaLand Mall Trust going out to 2023, and you can see them free on our platform here..
However, before you get too enthused, we’ve discovered 4 warning signs for CapitaLand Mall Trust (1 is a bit unpleasant!) that you should be aware of.
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