Price Target : S$ 2.34 (Prev S$ 2.38)
•Organic expansion and revaluation gains lift earnings
•New mall completions and healthy rental growth in China support NAV and cashflow
•Maintain BUY, TP S$2.34
In line set of results. CMA’s results were within expectations, with 2Q13 PATMI growing 6% y-o-y to S$246m while revenue was up 25% to S$93.4m. The results were lifted by higher rental income from new malls, a maiden share of recognition of S$12m profit from Bedok Residences and S$192m of revaluation and portfolio gains. 1H13 operating PATMI made up 45% of our full year forecast. The group has proposed an interim DPS of 1.75Scts, translating to a yield of 1.8%.
China continues to post healthy growth. Operating income grew 41% on year with improved contributions from the 7 China malls completed last year as well as better performance from its existing properties. Tenant sales psm in China was up 9.5% (excl Tier 1 cities: +11%), slightly better than 1Q13 while shopper traffic grew 0.8% y-o-y, a recovery compared to -0.9% in 1Q13. In Singapore, sales expanded a slight 3.5%. Other locations such as Japan and India reported higher footfalls and tenant sales.
More new mall openings and healthy rental reversion to support book NAV and cashflow. Going into 2H and 2014, the group would continue to boost operating performance within its portfolio as well as new mall openings in Singapore, China and India. Its China portfolio continues to enjoy double digit NPI growth on the back of robust organic improvement in rents. In S’pore, Bedok Mall (>90% precommitted) and Westgate (>70% preleased) are scheduled to open by year end. Current see-through gearing is a healthy 35% (potentially rising to 45% by year end) with cS$1bn of gross cash holdings. CMA remains selective stance on new investments.
Maintain Buy. We maintain our BUY call with an adjusted TP of S$2.34, after taking into account the lower TP for its reits. With 20 malls in the pipeline to be completed by 2017, earnings trajectory remains visible. The sentiment on China remains a dampener amid short term adjustments on growth quality, longer term prospects are bright, on the consumption front. This bodes well for CMA as a pan Asian retail real estate player.
Publish date: 24/07/13