Retail supply surge won't faze CapitaLand Mall Trust

Less than 50% are its "relevant competitors".

Whilst the street remains divided on the CapitaLand Mall Trust stock given the uncertainties of the impact from surging new retail supply over 2017-2019, DBS analysts believe the new supply may not be as threatening to CMT.

"According to our analysis, we estimate that only less than 50% of the incoming new supply are relevant competition to CMT’s properties," it said.

The major new supply is concentrated in 2018 and will likely have different target shoppers than CMT’s portfolio, e.g. Paya Lebar Quarter (office crowd) vs Bedok Mall (night/weekend family), and Changi Jewel (tourist and desitnation) vs Tampines Mall (neighbourhood) which means that performance should remain stable.

"Our DPU estimates are conservative and we believe that the new CEO could bring in fresh blood from expertise in managing retail malls in China, a more dynamic market," DBS added.