CMA reported 3Q12 PATMI of S$62.4m - up 70.8% YoY mostly due to Minhang and Hongkou contributions and increased management fees. We judge this set of results to be above consensus and our expectations, and 9M12 core PATMI, excluding extraordinary items, now make up 83% of our FY12 forecast, driven by faster than expected revenue growth at Minhang and Hongkou and a S$7.3m QoQ dip in admin expenses as mall-opening costs eased. We expect increased visibility of recurring earnings, as a larger component of CMA’s portfolio becomes operational, and relatively firm retail outlooks in China and Singapore to be positive drivers of its share price ahead. Maintain BUY with an increased fair value estimate of S$2.16 from S$1.85 previously as we update for valuations of REIT holdings and reduce the RNAV discount to par (from 10% previously).
Operational traction driving earnings surprise
CMA reported 3Q12 PATMI of S$62.4m – up 70.8% YoY mostly due to Minhang and Hongkou contributions and increased management fees. No one-time gains were booked during the quarter, and we judge this set of results to be above consensus and our expectations. 9M12 core PATMI, excluding extraordinary items, now make up 83% of our FY12 forecast, driven by faster than expected revenue growth at Minhang and Hongkou, and a S$7.3m QoQ dip in admin expenses as mall-opening costs eased. 3Q12 topline came in at S$102.1m – similarly up 52.6% YoY and above expectations.
9M12 Chinese tenant sales up 10.7% YoY
Retail conditions in China remained at healthy levels over 3Q12 though we note signs of mild deceleration in growth. CMA reported that 9M12 shopper traffic and tenant sales were up 8.4% and 10.7% YoY respectively and that, excluding Tier 1 cities, tenant sales were up 14.2%. 9M12 same-store NPI in China was up 18.4% YoY. 9M12 shopper traffic in Singapore was down 0.8% YoY, continuing a similar trend seen earlier this year due to construction works and competitive pressures. We note, however, that tenant sales still managed a 1.7% YoY uptick.
Key projects on schedule
Key projects were kept on schedule, with Star Vista opening in Sep 2012 (~90% of NLA committed) and the Bugis+ AEI completing in Jul 12 as planned. CMA also opened six new malls over 3Q12: CapitaMall Taiyanggong (Beijing), CapitaMall Rizhao (Rizao), CapitaMall Wusheng (Wuhan), CapitaMall Xuefu (Harbin), Raffles City Ningbo (Ningbo) and Raffles City Chengdu (Chengdu). This tracked closely to our expectations.
Maintain BUY with higher S$2.16 fair value
We expect increased visibility of recurring earnings, as a larger component of CMA’s portfolio becomes operational, and relatively firm retail outlooks in China and Singapore to be positive drivers of its share price ahead. Maintain BUY with an increased fair value estimate of S$2.16 from S$1.85 previously as we update for valuations of REIT holdings and reduce the RNAV discount to par (from 10% previously).
CMA reported 3Q12 PATMI of S$62.4m – up 70.8% YoY mostly due to Minhang and Hongkou contributions and increased management fees. No one-time gains were booked during the quarter, and we judge this set of results to be above consensus and our expectations. 9M12 core PATMI, excluding extraordinary items, now make up 83% of our FY12 forecast, driven by faster than expected revenue growth at Minhang and Hongkou, and a S$7.3m QoQ dip in admin expenses as mall-opening costs eased. 3Q12 topline came in at S$102.1m – similarly up 52.6% YoY and above expectations.
9M12 Chinese tenant sales up 10.7% YoY
Retail conditions in China remained at healthy levels over 3Q12 though we note signs of mild deceleration in growth. CMA reported that 9M12 shopper traffic and tenant sales were up 8.4% and 10.7% YoY respectively and that, excluding Tier 1 cities, tenant sales were up 14.2%. 9M12 same-store NPI in China was up 18.4% YoY. 9M12 shopper traffic in Singapore was down 0.8% YoY, continuing a similar trend seen earlier this year due to construction works and competitive pressures. We note, however, that tenant sales still managed a 1.7% YoY uptick.
Key projects on schedule
Key projects were kept on schedule, with Star Vista opening in Sep 2012 (~90% of NLA committed) and the Bugis+ AEI completing in Jul 12 as planned. CMA also opened six new malls over 3Q12: CapitaMall Taiyanggong (Beijing), CapitaMall Rizhao (Rizao), CapitaMall Wusheng (Wuhan), CapitaMall Xuefu (Harbin), Raffles City Ningbo (Ningbo) and Raffles City Chengdu (Chengdu). This tracked closely to our expectations.
Maintain BUY with higher S$2.16 fair value
We expect increased visibility of recurring earnings, as a larger component of CMA’s portfolio becomes operational, and relatively firm retail outlooks in China and Singapore to be positive drivers of its share price ahead. Maintain BUY with an increased fair value estimate of S$2.16 from S$1.85 previously as we update for valuations of REIT holdings and reduce the RNAV discount to par (from 10% previously).
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