Friday, February 7, 2014

CapitaRetail China Trust: 4Q13 results in line (OCBC)

CapitaRetail China Trust:
Fair value S$1.54
add: 12m dividend forecast S$0.096
versus: Current price S$1.310
4Q13 results in line

CRCT reported 4Q13 results that were in line with ours and the street’s expectations. Gross revenue climbed 8.9% YoY to S$41.2m, driven by revenue growth from CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan. Net property income rose 6.6% to S$25.8m. Distributable income grew 5.6% to S$17.7m. DPU, however, fell 4.3% to 2.20 S cents due to a private placement in Nov 2012. Excluding CapitaMall Minzhongleyuan, which has been closed for asset enhancement since Jul 2013, CRCT’s 4Q13 gross revenue and NPI grew by 11.2% and 9.5% respectively in RMB terms. Using a higher cost of equity (9.5% versus 8.9% previously), we lower our FV to S$1.54 from S$1.64 and maintain a BUY rating on CRCT.


Gross revenue up 9% YoY
CRCT reported 4Q13 results that were in line with ours and the street’s expectations. Gross revenue climbed 8.9% YoY to S$41.2m, driven by revenue growth from CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan. Net property income rose 6.6% to S$25.8m. Distributable income grew 5.6% to S$17.7m. DPU, however, fell 4.3% to 2.20 S cents due to a private placement in Nov 2012. Excluding CapitaMall Minzhongleyuan (“MZLY”), which has been closed for asset enhancement since Jul 2013, CRCT’s 4Q13 gross revenue and NPI grew by 11.2% and 9.5% respectively in RMB terms. In SGD-terms, the increases were 16.8% and 15.2% respectively; exchange rates proved a tailwind for CRCT.

Rental reversion at 17.5%
Tenant sales for the multi-tenanted malls, excluding MZLY, grew 10.5% YoY and 9.0% QoQ in 4Q13. Shopper traffic grew 3.9% YoY but fell 1.2% QoQ due to CapitaMall Wuhu, which is in an area that is seeing the resettlement of 2-3k households. However, sales per sqm at the property have gone up, indicating higher quality shoppers are now attracted. Rental reversion for the multi-tenanted malls, excluding MZLY, was good at 17.5% (excluding Grand Canyon as well, the figure would be 10.8%). Grand Canyon registered rental reversion of 100.9% in 4Q13. The acquisition of Grand Canyon Mall was completed on 30 Dec 2013, ahead of schedule. Popular tenants, both new and renewed, include Hush Puppies, Häagen-Dazs and Formosa Optical. Wuhu was the only multi-tenanted mall, excluding MZLY, which registered negative rental reversion. The 9.4% decline was mainly due to new tenants at level one and four which entered at lower rates.

Update on MZLY
For MZLY, ~71% is leased or under advance negotiation. The rents are better than what was previously budgeted. MZLY is on track to open in 2Q14, with a possible progressive opening starting from the beginning of May. Committed tenants include Adidas, Starbucks and Gong Cha.

Maintain BUY
Using a higher cost of equity (9.5% versus 8.9% previously), we lower our FV to S$1.54 from S$1.64 and maintain a BUY rating on CRCT.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 30/01/14

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