Monday, July 22, 2013

CapitaRetail China Trust: Improved debt profile in 2Q13 (OCBC)

CapitaRetail China Trust:
Fair value S$1.58
add: 12m dividend forecast S$0.091
versus: Current price S$1.485

Improved debt profile in 2Q13
• Distributable income climbs 7.5% YoY
• Healthy debt profile
• Maintain BUY

CRCT’s 2Q13 results were in line with ours and the street’s expectations. Net property income rose by 6.0% YoY to S$26.4m and income available for distribution was 7.5% higher at S$17.9m. NPI would have grown 9.5% YoY excluding CapitaMall Minzhongleyuan, which is undergoing AEI.
CRCT has refinanced the S$150.5m due in June 2013 and significantly improved the average term to maturity of its debt to 2.52 years as at 30 June from 1.30 years as at 31 March. The fixed rate proportion of CRCT's debt is 78%. Apart from the CapitaMall Anzhen unsecured onshore loan maturing next year, all other loans are offshore, and the average cost of debt for 2Q13 was at 2.58%. Gearing stands at 23.5% and all assets are unencumbered. We maintain our BUY rating and fair value of S$1.58.

2Q13 NPI up 6.0% YoY
CRCT’s 2Q13 results were in line with ours and the street’s expectations. Gross revenue climbed by 4.9% YoY to S$40.0m, net property income rose by 6.0% to S$26.4m and income available for distribution was 7.5% higher at S$17.9m. NPI would have grown 9.5% YoY excluding CapitaMall Minzhongleyuan (MZLY), which is undergoing AEI. Tenant sales growth and portfolio rental reversion and for the multi-tenanted malls, excluding MZLY, were good at 9.5% YoY and 17.3% respectively. DPU fell 1.2% YoY to 2.38 S cents. However, excluding the 57m units issued through private placement in Oct 2012, 2Q13 DPU would have been 2.58 cents, up 7.1%. The portfolio valuation rose 4.4% from Dec 2012 to RMB7.9b as at 30 Jun.

Distribution Reinvestment Plan
The REIT manager is applying the Distribution Reinvestment Plan (DRP) established on 21 Mar 2013 to the 1H13 distribution. Unitholders can receive distributions in the form of fully-paid new units in CRCT, instead of cash. For this first DRP roll-out, CRCT will offer a 4.0% discount to the volume-weighted average trade price per unit of 10 market days up to the books closure date on 12 Aug 2013. The DRP will help CRCT fund its proposed acquisition of Grand Canyon Mall.
Doubling the average term to maturity of debt
CRCT has refinanced the S$150.5m due in June 2013 and significantly improved the average term to maturity of its debt to 2.52 years as at 30 June from 1.30 years as at 31 March. The fixed rate proportion of CRCT's debt is 78%. Apart from the CapitaMall Anzhen unsecured onshore loan maturing next year, all other loans are offshore, and the average cost of debt for 2Q13 was at 2.58% (versus 2.51% for 1Q13). Gearing stands at 23.5% and all assets are unencumbered.

Maintain FV of S$1.58
We maintain our fair value of S$1.58 FV and BUY rating on CRCT.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 19/07/13

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