Friday, February 13, 2015

CapitalMalls Malaysia Trust (CMMT)

Few days ago, a news appeal on the Sun with title, CapitalMalls Malaysia Trust (CMMT) has entered into the sales and purchase agreement with Tropicana City Malaysia Sdn Bhd for the acquisition of Tropicana City Mall and Tropicana Office Tower PJ for RM540 million. (not include the residential condo on Tropicana City Mall)

The management indicate the total expense is about RM25 million, so the total amount is about RM565 million. Seem they missed out one point, the GST which going to implement on April 2015, assume the transaction take to complete on 3rd quarter of 2015. If this is the case, the GST alone is about 32.4 million!

CMMT not yet decide how to raise the fund, be it Right Issue or raise bond (or borrow money), either way, share holder is the one who going to bear the cost. Personally, I do hope this transaction not going through, since the currently rental return on Tropicana City Mall is about 5% if base of RM540 million, not yet include the charges and related GST.

On the bright side, the Government has announced that electricity price will be lower by 5.8% for the next 3 months. This will decrease the impact of GST implementation, however, the rate on GST is still far more than the cost saving for CMMT, since the GST is base on the rental income and trading of transaction. Seem all the share holder will expect lower dividend pay out in the coming quarter.

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