CapitaMalls Asia

Kim Eng on 13 Feb 2012


CapitaMalls Asia (CMA SP) – At the point of inflection
Previous day closing price: $1.48
Recommendation – Buy (maintained)
Target price – $1.92 (maintained)


CapitaMalls Asia reported an FY11 PATMI of $456.0m, a 15.8% decrease YoY after its FY10 numbers were restated upwards to account for the full recognition of profits from the units at The Orchard Residences which were previously sold under the deferred payment scheme. Excluding $320m of revaluation gains, underlying PATMI was largely in line with expectations. Management is proposing a 1.5 cent per share final dividend, for a full-year dividend of 3 cents per share, as guided previously.


Management cited that 2012 will be an inflection point for CMA, in line with our expectations. Recurring PATMI is likely to see strong growth with greater contributions from China and even in Singapore with the expected opening of The Star Vista at Buona Vista. Having committed to $3.4b worth of investments in 2011, the $2b target set earlier last year had been exceeded. We reckon that the pace of acquisitions will slow down in 2012 as the group focuses on getting its existing malls up to speed. Acquisitions are likely to take place only if the right opportunities come along, and at the right prices.


CMA’s malls in China continue to see strong growth in shopper traffic and tenant sales. Net property income for its malls in China rose by 20.7% YoY on a same-store basis, allowing the group ample headroom for upward rental reversion. Financially, its balance sheet remains very strong as of end-2011 with just under $1b of cash and a net D/E of only 3.9%. Its debt maturity profile is currently well managed with debt of no more than 10% of group NAV maturing in any year. We are keeping our forecasts unchanged and maintain our target price of $1.92. CMA still trades below its book value of $1.60 per share. Reiterate Buy.