Monday, July 29, 2013

CapitaMalls Asia: Gaining good traction (OCBC)

CapitaMalls Asia:
Fair value S$2.55
add: 12m dividend forecast S$0.04
versus: Current price S$1.94

Gaining good traction
• 2Q13 results within expectations
• NPI performances healthy
• Bedok Mall and Westgate to open in 4Q13

CMA’s 2Q13 PATMI is S$245.6m, which increased 5.9% YoY mainly due to higher fair value gains for Chinese assets and ION Orchard and profit recognition at Bedok Residences, partially offset by a lower divestment gain. Excluding one-time items, we view the 2Q13 results to be mostly within expectations and YTD core PATMI now makes up 63% of our FY13 forecast.
We continue to see relatively firm NPI statistics across the group’s mall portfolio. In China (which makes up 51% exposure of total assets excl. cash), 1H13 tenants sales at CMA’s malls grew at 9.5% YoY on a psf basis. In Singapore, shopper traffic and tenant sales are up a healthy 4.2% and 3.5% YoY, respectively. Looking ahead, CMA expects to open phase 2 of CapitaMall Jinniu in Chengdu, China in 3Q13, and Bedok Mall and Westgate in 4Q13. We rate the stock with a BUY rating and an unchanged fair value estimate of S$2.55.

Core performance within expectations
CMA’s 2Q13 PATMI is S$245.6m, which increased 5.9% YoY mainly due to higher fair value gains for Chinese assets and ION Orchard and profit recognition at Bedok Residences, partially offset by a lower divestment gain. Excluding one-time items, we view the 2Q13 results to be mostly within expectations and YTD core PATMI now makes up 63% of our FY13 forecast. Topline for 2Q13 came in at S$93.4m, up 25.2% YoY as contributions rolled in from Olinas Mall (Japan) and The Star Vista (Singapore) which opened in Jul-12 and Sep-12, respectively. The group also announced an interim dividend of 1.75 S-cents per share.

Healthy NPI growth across portfolio
We continue to see relatively firm NPI statistics across the group’s mall portfolio. In China (which makes up 51% exposure of total assets excl. cash), 1H13 tenants sales at CMA’s malls grew at 9.5% YoY on a psf basis; excluding tier 1 cities, tenant sales grew by 11.0% YoY. Same-mall NPI growth is up 12.1% YoY in 1H13, and NPI yield on cost improved by an encouraging 7.1% to 24.2% across mall vintages. Chinese portfolio-wide occupancy rates is at a healthy 96.9%. The group also expects to open phase 2 of CapitaMall Jinniu in Chengdu, China in 3Q13. In Singapore, shopper traffic and tenant sales are up a healthy 4.2% and 3.5% YoY, respectively. The group expects to begin operations at Bedok Mall (with 90% committed occupancy) and Westgate (with >75% committed occupancy) in 4Q13.

Maintain BUY at an unchanged S$2.55 fair value
We rate the stock with a BUY rating and an unchanged fair value estimate of S$2.55. While the group’s share price has been impacted by fears of a credit crunch in China over the last two months, long term tailwinds from the secular growth in Chinese retail consumption remain intact, in our view, and we note that the group’s balance sheet remains strong with an effective net gearing ratio of 35% and cash holdings of S$817m (as at end Jun-13).


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 24/07/13

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