Thursday, October 24, 2013

CapitaRetail China Trust: 3Q13 results in line (OCBC)

CapitaRetail China Trust:
Fair value S$1.64
add: 12m dividend forecast S$0.091
versus: Current price S$1.395

3Q13 results in line
• Distributable income up 2.1% YoY
• Tenant sales up 10.1% YoY
• FV of S$1.64

CRCT reported 3Q13 results that were in line with ours and the street’s expectations. Gross revenue climbed 2.2% YoY to S$39.5m. Property expenses rose 7.8% to S$14.5m, chiefly due to higher property management fees and staff related costs.
Net property income fell 0.8% to S$25.0m. Total return for the period after tax stayed roughly flat at S$15.2m. 3Q13 distributable income grew 2.1% to S$17.1m. DPU, however, fell 6.6% to 2.26 S cents due to a private placement last Nov. Rental reversion for the multi-tenanted malls, excluding CapitaMall Minzhongleyuan (which is undergoing AEI), is healthy at 10.0%. Tweaking our forecasts, lowering the cost of equity and taking into account the ~6.0m new CRCT units which were allotted and issued in Sep under the Distribution Reinvestment Plan, we increase our FV to S$1.64 from S$1.58 and maintain a BUY rating on CRCT.

Gross revenue up 2% YoY
CRCT reported 3Q13 results that were in line with ours and the street’s expectations. Gross revenue climbed 2.2% YoY to S$39.5m. Property expenses rose 7.8% to S$14.5m, chiefly due to higher property management fees and staff related costs. Net property income fell 0.8% to S$25.0m. Total return for the period after tax stayed roughly flat at S$15.2m. 3Q13 distributable income grew 2.1% to S$17.1m. DPU, however, fell 6.6% to 2.26 S cents due to a private placement last Nov. Excluding CapitaMall Minzhongleyuan (“MZLY”), which has been closed for asset enhancement since Jul, CRCT’s 3Q13 gross revenue and NPI grew by 5.3% and 1.7% respectively in RMB terms.

Rental reversion at 10.0%
Tenant sales for the multi-tenanted malls, excluding MZLY, grew 10.1% YoY and 3.7% QoQ. Shopper traffic grew 3.4% YoY and 8.1% QoQ. Rental reversion for the multi-tenanted malls, excluding MZLY, was healthy at 10.0%. CapitaMall Wuhu was the only multi-tenanted mall, excluding MZLY, which registered negative rental reversion. The 1.2% decline was due to new tenants at level one which entered at lower rates. With new fashion tenants, CapitaMall Wangjing has seen its rent boosted, with rental reversion at 15.9%.

Updates on MZLY and Grand Canyon Mall
For MZLY, over half of the space to be leased has been committed. The rents likely to be achieved are 15.8% higher than the targeted rent (excluding the anchor tenant). Some of the committed tenants include Swatch, Charles & Keith, Starbucks and UA Cinemas (with the only IMAX in the vicinity). An application has been submitted to the Chinese government for the proposed acquisition of Grand Canyon Mall. Approval should be received in 4Q13 and CRCT is on track to complete the acquisition in 1Q14.

Maintain BUY
Tweaking our forecasts, lowering the cost of equity and taking into account the ~6.0m new CRCT units which were allotted and issued in Sep under the Distribution Reinvestment Plan, we increase our FV to S$1.64 from S$1.58 and maintain a BUY rating on CRCT.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 23/10/13

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