CLMT: Strong Operational Performance Drives Earnings Beat, Target Price Raised by 25%

Performance Exceeds Expectations

A leading real estate investment trust has reported a robust financial performance for the fiscal year 2025, with realised net profit reaching RM149.3 million. This figure aligns closely with market expectations, representing approximately 98% of both the investment bank’s and consensus full-year forecasts. The strong results were further underscored by a 4.1% year-on-year increase in distribution per unit (DPU) to 4.84 sen, translating into an attractive distribution yield of 7.2% based on the latest closing price.

Net property income (NPI) saw a significant 9.7% year-on-year growth, reaching RM289.4 million. This was primarily fueled by positive rental reversions, strategic rental step-ups, and the full impact of contributions from recently acquired logistics assets. Together with a stable portfolio performance, these factors collectively lifted the realised net profit by 12.6% year-on-year. On a sequential basis, the fourth quarter of 2025 also showed impressive growth, with realised net profit climbing 21% quarter-on-quarter to RM42.0 million, boosted by higher rental income and a 5.9-percentage point improvement in NPI margin to 65.4%, largely due to effective cost management, particularly lower utilities expenses.

Resilient Portfolio and Future Strategy

Portfolio fundamentals demonstrated continued resilience throughout the year. Malls located outside the Klang Valley maintained strong occupancy rates above 99% as of end-2025. The retail rental reversion remained notably healthy, recording a 12% year-on-year increase for FY25. The trust also noted that lease expiry risk remains manageable, with only 29% of its gross rental income slated for renewal in 2026. Furthermore, 11.6% of the FY26 expiries have already been renewed, providing good earnings visibility.

Looking ahead, management maintains a constructive retail outlook, despite increasing competition from new malls. The strategy for 2026 involves rolling out selective asset enhancement initiatives (AEIs) focused on defending asset quality, tenant mix, and mall positioning, rather than embarking on large-scale, capital-intensive projects. The retail rental reversion outlook remains positive, supported by steady tenant demand and an anticipated footfall uplift from “Visit Malaysia Year 2026,” particularly for tourist-centric assets, with management guiding towards low-teens rental reversion for the upcoming year.

The industrial and logistics segment continues to be a key growth pillar. Following the completion of Synergy Logistics Hub in November 2025, the trust has proposed a forward purchase of five high-specification industrial assets in Iskandar Malaysia, with completion targeted by the first quarter of 2028. This move aims to further build exposure within the high-growth Johor region.

Investment Bank’s View and Recommendation

In light of the strong FY25 results and strategic initiatives, TA SECURITIES has marginally adjusted its FY26 and FY27 earnings forecasts upwards by 0.5% and 0.9% respectively. The investment bank maintains its BUY recommendation for the stock, raising its target price to RM0.25, representing a 25.0% upside from the last traded price of RM0.20. The trust also received a commendable ESG rating of four stars (★★★★) from the firm.