CapitaMalls Asia Limited:
STI : 3,039.90
Price Target : 12-Month S$ 2.28 (Prev S$ 2.22)
Rising recurrent income
•Results in line, lifted by improved operational performance
•More new completions to raise recurrent income
•Maintain BUY, TP S$2.28
Improvements across the board. CMA posted a 17% rise in 4Q13 PATMI to S$216m. Stripping revals, operating PATMI was S$60.9m, 55% higher y-o-y. This was achieved by better showings across its geographical footprint. For FY13, it recorded PATMI of S$600m, 10% higher y-o-y and an operating PATMI of S$246m, which is within expectations.
The group has proposed a final DPS of 1.75Scts, bringing its full-year DPS to 3.5Scts for FY13. The better performance was due to the opening of Star Vista In Spore, residential contributions from Bedok Residences and improved tenant sales and shopper traffic across its overseas operations. In Singapore, shopper traffic and tenant sales grew 2.4-3.2%, while footfalls in China expanded 2.2% and tenant sales rose by a higher 10%, indicating that shoppers are continuing to spend. In Japan and India, tenant sales and shopper traffic grew between 4-6%.
Ramping up recurrent income contribution. Boosting operational performance in FY14 will be full-year rental contributions from Bedok and Westgate Malls in Spore, a one-off gain of $90m from the sale of Westgate office, and ramp up in contributions from China malls that opened in 2013. In addition, the group has scheduled for four malls (two each in China and India) to open in 2014. With tenant sales growth still at low double digits, we think the mass and middle consumer segments are still robust and this will benefit CMA’s malls. Beyond FY14, there are 16 other malls under development in the pipeline, of which nine are in China. The progressive completion of these properties will add to forward earnings visibility. With a see-through gearing of 36%, CMA has sufficient cash and funding for its development commitments.
Maintain BUY. We maintain our BUY recommendation on CMA with a revised TP of S$2.28, pegged at a 20% discount to RNAV of S$2.85. The stock is also currently trading below its book NAV of S$1.84. We continue to like CMA’s Pan Asian consumption exposure through its retail real estate sector.
Publish date: 14/02/14