CapitaMalls Asia -
Price (S$) 1.74
12 month price target (S$) 2.52
In line with expectations: China delivers, positive tone in 2014
What surprised us
CMA reported operating net profit of S$61mn in 4Q13 (-6% qoq, +55% yoy) and S$246mn in 2013, in line at 97% of GSe FY13. Revaluations, a key earnings driver, were S$329mn in 2013, 17% above GSe of S$280mn; 2H13 revaluations of S$150mn were driven by NPI growth, no compression in cap rate.
(1) China tenant sales healthy, +10.1% yoy in 2013 vs. +9.8% yoy in 2012; with same-mall NPI +13.1% yoy in 2013 (was +12.0% yoy in 9M13). (2) Singapore’s tenant sales improved +3.2% yoy in 2013 vs. +2.0% yoy in 2012; same-mall NPI +4.5% yoy in 2013 vs. +2.7% yoy in 2012. (3) Planned opening of 4 malls in 2014; 2 in China and 2 in India; total pipeline of 20 malls. (4) Proposed dividend of 3.5cents for 2013, +7.7% yoy.
What to do with the stock
Management struck a positive tone on current operations and expansion plans in key markets of China and Singapore. In China, CMA’s tenant sales growth of 10.1% yoy in 2013 despite shopper traffic of +2.2% yoy suggests its malls are capturing more “meaningful” traffic, reflective of CMA’s operational strength and leadership; YTD14 retail sales momentum strong.
In Singapore, recent mall openings are slightly ahead of expectations; Bedok Mall delivering initial yields above guidance of 6% and Westgate about 5%-6% (despite competition from JEM).
Despite its steady delivery, CMA trades at a 41% discount to NAV (-1SD), implying that the market is not pricing in its steady mall build-out with 20 announced malls in the pipeline, growing operational NLA by 52% from 2013-2017E. Maintain CL-Buy and 12-m NAV-based TP of S$2.52; introduce 2016 EPS of S$0.17.
Risks: Ecommerce and retail supply challenge.
Source/Extract/Excerpts/来源/转贴/摘录: Goldman Sachs
Publish date: 14/02/14