STI : 3,167.43
Price Target : 12-month S$ 1.60
Growth Drivers in place
• Growth engines humming in tune
• Inorganic drivers in place; highest DPU CAGR of 9.0%
• BUYm TP S$1.60
Growth engines humming in tune. The coming two years could be transformational for CRCT. After refining its portfolio tenant mix and the completion of various asset enhancements, CRCT’s mall portfolio is consistently seeing strong shopper traffic and tenant sales,
resulting in the malls achieving higher rental reversions (averaging 17% over 2Q12-2Q13) compared to the average of 12% over 1Q11-1Q12. With a renewed tenanted mix and a stronger operational footing, we believe this trend is likely to continue going forward.
Inorganic growth initiatives to propel the trust forward. In addition, CRCT aims to deliver earnings alpha through planned inorganic growth initiatives through (i) refurbishment of CapitaMall Mingzhongleyuan Mall and (ii) proposed acquisition of Grand Canyon Mall, which when completed in 1H14 are key growth catalysts for CRCT. Apart from robust FY13-15F DPU CAGR of 7% ( almost doubling its organic growth potential), CRCT’s earnings base will also broaden and will be further diversified. Contribution from its multi-tenanted malls will increase to 79% of net property income, meaning that the trust earnings should reflect underlying performance better.
BUY maintained, TP S$1.60. We see value emerging after recent price decline. The stock offers an attractive FY13- 15F DPU yields of 7.0%-8.3%, which is higher than the SREIT peer average of 6.3-6.7%.
Publish date: 02/01/14