HOLD S$1.17
Price Target : S$ 1.31 (Prev S$ 1.30)
At a Glance
• 9M11 DPU forms 75% of FY11 DPU
• Good underlying performance, double digit rental reversion growth rate of 11.9%
• Maintain Hold at a revised TP of S$1.31
Comment on Results
In line with expectations. Underlying 3Q revenues in RMB terms grew by 21.6% supported by robust performance across all malls as well as the maiden contribution from Minzhongleyuan Mall. However, the strong S$ continued to erode topline and NPI growth to a lower 13.7–13.8% y-o-y to S$33.8m and S$21.7m respectively. 3Q distribution income was 1.9% higher at S$14.6m (DPU of 2.12Scts). 9M DPU of 6.42cts forms 75% of our full year forecast.
Strong underlying performance. CRCT’s malls saw another consecutive quarter of double digit rental reversion growth rate of 11.9% for 173 new and renewal leases in 3Q. Overall occupancy stabilised at 97.7%, with Mingzhongleyuan Mall’s occupancy rising from 90.6% to 94.8%. Tenant sales jumped 21.1% yoy supported by a 2.9% growth in shopper traffic. Going forward, earnings are likely to see steady growth momentum with about 7.0% and 25.5% of gross rental income expiring in FY11 and FY12 respectively. The opening of three Metro lines and North railway station which is connected to Xizhimen Mall is likely to drive footfalls and boost retail sales.
Gearing remains healthy at 31.4 %. The refinancing is expected to be concluded in 4Q11 and would further extend its current 1.56 year debt maturity profile.
Recommendation
Likely to be affected by continued gradual SGD appreciation, Maintain Hold. We like CRCT’s pro-active leasing strategy and ability to drive rental renewals and occupancies. We believe DPU growth will continue to be dampened by further but more gradual appreciation in the S$. The stock is currently trading at FY12 DPU of 7.4%. Maintain Hold at revised DCF-backed target price of S$1.31 as we roll forward to FY12 numbers.
No comments:
Post a Comment