OCBC on 26 Jul 2012
For 2Q12, CRCT’s revenue rose 18.2% YoY to RMB190.2m and net property income climbed 15.0% to RMB124.4m. Income available for distribution rose 23.5% to S$16.65m. Solid rental reversions of 15.2% YoY for the portfolio were achieved (versus 13.0% for 1Q12). CapitaMall Xizhimen in Beijing saw the highest rental reversion of 28.9% on the back of a 52.1% YoY increase in shopper traffic to approximately 85k-90k people per day, following the opening of a basement connection to the subway. CapitaMall Saihan in Huhot, Inner Mongolia, registered the highest NPI growth of 38.2%. We maintain our BUY rating on CRCT and raise out fair value from S$1.44 to S$1.50. CRCT is offering an attractive FY12F dividend yield of 6.9%.
Slightly above expectations
CRCT reported 2Q12 income available for distribution of S$16.65m, up 23.5% YoY. 2Q12 DPU is 2.41 S-cents per share. The results were slightly above our expectations; YTD DPU of 4.82 S-cents made up 52% of our initial full-year forecast. 2Q12 revenue rose 18.2% YoY to RMB190.2m and net property income climbed 15.0% to RMB124.4m. CapitaMall. The increase was chiefly due to the contribution from CapitaMall Minzhongleyuan which was acquired on 30 June 2011, as well as higher rental growth at its multi-tenanted malls. Shopper traffic and tenant sales at CRCT’s multi-tenanted malls grew 26.4% and 13.1% respectively.
Good rental reversions
Solid rental reversions of 15.2% YoY for the portfolio were achieved (versus 13.0% for 1Q12). CapitaMall Xizhimen in Beijing saw the highest rental reversion of 28.9% on the back of a 52.1% YoY increase in shopper traffic to approximately 85k-90k people per day, following the opening of a basement connection to the subway. Management said that tenant sales at Xizhimen grew at a high single digit percentage rate, and believes that there is further potential to fine-tune the tenant mix at the mall. Management will be bringing in international fast fashion brands such as UNIQLO and Urban Renewal to Xizhimen. Our understanding is that the recent floods in Beijing will not have a significant impact on CRCT’s malls there.
Transformation of CapitaMall Saihan
CapitaMall Saihan in Huhot, Inner Mongolia, registered the highest NPI growth of 38.2%. Since the completion of AEI at Saihan in 2010, which marked its transformation from a master-leased mall to a multi-tenanted mall, Saihan has experienced strong growth, with occupancy at 99.7% as of Jun 2012.
Maintain BUY
We maintain our BUY rating on CRCT and raise our fair value from S$1.44 to S$1.50. CRCT is offering a good FY12F dividend yield of 6.9%.
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