Reducing FY09E and 10E DPU – Apart from dilution from the rights issue, we have also reduced our FY09 and FY10 estimates to reflect the delay in asset enhancements at Jurong Entertainment Centre and The Atrium. We have pushed back the AEIs by 1 year and 2 years, respectively. The increase in net profit is due to the lower interest costs arising from the repayment of loans using proceeds of the rights issue, offset by delays in the AEIs.

DPU dilution of 30-40% – Dilution from the rights issue was 30% for FY09E and 40% in FY10E. The delay in the AEIs accounted for the rest of the decline in DPU. Our TP post rights issue was S$1.56 and the further reduction of 6 cents to S$1.50 is due to the delay in AEIs and lower rental rates assumed with enhancement space.

Gearing to fall to 29.1% – Following the rights issue, CMT’s gearing should fall from 43.2% to 29.1%.

Maintain Buy rating – With half of its portfolio in suburban malls, where rentals have traditionally been fairly resilient during economic downturn, we think CMT’s income stream is relative defensive.