After CapitaLand Mall Trust’s (SGX:C38U) earnings announcement on 31 December 2018, analyst forecasts appear to be pessimistic, with profits predicted to drop by -30% next year compared with the past 5-year average growth rate of 2.4%. Currently with a trailing-twelve-month profit of S$677m, the consensus growth rate suggests that earnings will drop to S$470m by 2020. Below is a brief commentary on the longer term outlook the market has for CapitaLand Mall Trust. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 20 analysts covering C38U’s stock is one of negative sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of C38U’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of S$677m and the final forecast of S$573m by 2022, the annual rate of growth for C38U’s earnings is -5.2%. EPS reaches SGD0.14 in the final year of forecast compared to the current SGD0.19 EPS today. The bottom-line decline seems to be caused by cost growth exceeding top-line growth of 6.4% in the next three years. Furthermore, the current 97% margin is expected to contract to 68% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For CapitaLand Mall Trust, there are three fundamental factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is CapitaLand Mall Trust worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CapitaLand Mall Trust is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of CapitaLand Mall Trust? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.