Summary: CAPL’s 2Q13 PATMI decreased 0.7% YoY to S$383.1m. We judge this to be within expectations; 1H13 PATMI now cumulates to S$571.3m which makes up 65% of our full year forecast. The group sold 736 Chinese residential units in 2Q13, which is respectable but somewhat slower than the 955-unit pace in 1Q13. Management guides that Chinese sales would likely fall to around 3.3k units for FY13, pointing to c.1.6k units in 2H13 – still healthy but below the 1.9k-unit pace in 2H12. In Singapore, residential sales slowed to 139 units in 2Q13 in the aftermath of a blowout 1Q13 (544 units sold) driven by discounts. Mall subsidiary CMA continues to report firm operating statistics: same-mall NPI in China and Singapore in 1H13 is up 12.1% and 2.0% YoY, respectively. We believe CAPL’s strategy of growing competitive scale in six geographic clusters is sound and well thought out, and we continue to see value in CAPL shares at current levels. Maintain BUY with an unchanged fair value estimate of S$3.77.
2Q13 earnings within expectations
CAPL’s 2Q13 PATMI decreased 0.7% YoY to S$383.1m. We judge this to be within expectations; 1H13 PATMI now cumulates to S$571.3m which makes up 65% of our full year forecast. 1H13 topline is S$1,844.6m, up 22.7% YoY mostly due to higher recognitions from residential projects in Singapore and China and stronger contributions from CMA and Ascott. However, we note that group-wide gross margins dipped significantly QoQ from 40% in 1Q13 to 28% in 2Q13 due to slimmer margins at projects booked over the quarter. No interim dividend is announced by the group.
Chinese sales likely to hold steady in 2H13
CAPL sold 736 Chinese residential units in 2Q13, which is respectable but somewhat slower than the 955-unit pace in 1Q13. Management guides that Chinese sales would likely fall to around 3.3k units for FY13, pointing to c.1.6k units in 2H13 – still healthy but below the 1.9k-unit pace in 2H12. In Singapore, residential sales slowed to 139 units in 2Q13 in the aftermath of a blowout 1Q13 (544 units sold) driven by discounts. Unsold pipeline as of end Jun-13 consists of 883 units at The Interlace, d’Leedon and Sky Habitat, and the group aims to launch Marine Point (124 units) and Bishan St 14 (694 units) in 2H13.
CMA’s business model gaining traction
Mall subsidiary CMA reported 2Q13 PATMI of S$245.6m, up 5.9% YoY mainly due to higher fair value gains for Chinese assets and ION Orchard, and profit recognition at Bedok Residences. We continue to see firm operating statistics: same-mall NPI in China and Singapore in 1H13 is up 12.1% and 2.0% YoY, respectively.
Building competitive scale
We believe CAPL’s strategy of growing competitive scale in six geographic clusters (Singapore, Beijing/Tianjin, Chengdu/Chongqing, Shanghai/Hangzhou/Suzhou/Ningbo, Guangzhou/Shenzhen, and Wuhan) is sound and well thought out, and we continue to see value in CAPL shares at current levels. Maintain BUY with an unchanged fair value estimate of S$3.77.
CAPL’s 2Q13 PATMI decreased 0.7% YoY to S$383.1m. We judge this to be within expectations; 1H13 PATMI now cumulates to S$571.3m which makes up 65% of our full year forecast. 1H13 topline is S$1,844.6m, up 22.7% YoY mostly due to higher recognitions from residential projects in Singapore and China and stronger contributions from CMA and Ascott. However, we note that group-wide gross margins dipped significantly QoQ from 40% in 1Q13 to 28% in 2Q13 due to slimmer margins at projects booked over the quarter. No interim dividend is announced by the group.
Chinese sales likely to hold steady in 2H13
CAPL sold 736 Chinese residential units in 2Q13, which is respectable but somewhat slower than the 955-unit pace in 1Q13. Management guides that Chinese sales would likely fall to around 3.3k units for FY13, pointing to c.1.6k units in 2H13 – still healthy but below the 1.9k-unit pace in 2H12. In Singapore, residential sales slowed to 139 units in 2Q13 in the aftermath of a blowout 1Q13 (544 units sold) driven by discounts. Unsold pipeline as of end Jun-13 consists of 883 units at The Interlace, d’Leedon and Sky Habitat, and the group aims to launch Marine Point (124 units) and Bishan St 14 (694 units) in 2H13.
CMA’s business model gaining traction
Mall subsidiary CMA reported 2Q13 PATMI of S$245.6m, up 5.9% YoY mainly due to higher fair value gains for Chinese assets and ION Orchard, and profit recognition at Bedok Residences. We continue to see firm operating statistics: same-mall NPI in China and Singapore in 1H13 is up 12.1% and 2.0% YoY, respectively.
Building competitive scale
We believe CAPL’s strategy of growing competitive scale in six geographic clusters (Singapore, Beijing/Tianjin, Chengdu/Chongqing, Shanghai/Hangzhou/Suzhou/Ningbo, Guangzhou/Shenzhen, and Wuhan) is sound and well thought out, and we continue to see value in CAPL shares at current levels. Maintain BUY with an unchanged fair value estimate of S$3.77.
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