CapitaMalls Asia Ltd - Priced for Upside (OCBC)

Maintain BUY

Previous Rating: BUY

Current Price: S$1.305

Fair Value: S$1.67

Priced for upside. We believe CMA’s price underperformance to date is due to a growth-heavy portfolio of uncompleted malls, which involves significant operational uncertainty over a lengthy gestation period, and market concern of a hard-landing scenario in China. After re-examining these drivers in relation to our investment thesis, we believe that there is still upside from current prices. Our investment thesis for CMA rests on two parts. First, capital recycling ahead - after its recent capital deployment of S$950m for Hongkou and Minhang, our numbers suggest that CMA can potentially recycle capital if more acquisition opportunities arise. This implies mature asset sales and likely divestment gains ahead. Secondly, underlying fundamental value - we examine the potential effects of a Chinese hard-landing scenario on CMA’s value and judge that the market has overly discounted the price for a bear scenario.

Capital recycling ahead. CMA recently announced planned acquisitions of additional 50% stakes in Hongkou and Minhang Plaza for S$950m. By our calculations, this increases the amount of CMA’s total outstanding capital commitment to S$2.1bn currently. Working off the balance sheet as of end 2Q11, we estimate that CMA has current available capital of S$2.0bn (S$1.2bn cash + S$0.8bn debt-headroom) assuming a debt-equity target of 30%. This implies CMA can potentially recycle capital if it wishes to continue on an active acquisition stance. Looking forward, we see possible divestments of the Orchard ION or mature Chinese malls to CMT or other parties.

Overwrought about Chinese hard-landing. We examined the break-down of gross asset value, by cities, of CMA’s property assets on a “look-through” basis and found the highest exposure to Singapore (52%), and then Shanghai (20%) and Beijing (6%). We then investigated the impact of the last crisis (FY08-09) on retail assets in these key cities and judge that retail capital values in Singapore, Shanghai and Beijing could fall 30%-40% in the event of a prolonged crisis. Using a scenarioweighted framework with 20% likelihood of a Chinese hardlanding, we derived a fair value estimate of S$1.67 for CMA. In addition, we put the current market valuation against our framework and observe that the current price roughly translates to a 60%-80% likelihood of a bear scenario – which is overwrought in our view.

BUY CMA – priced for upside. We reiterate our BUY rating on CMA with a revised fair value estimate of S$1.67 based on a scenario-weighted sum of the parts (SOTP) methodology, versus S$2.09 previously. Possible upside catalysts are divestments of mature assets, further acquisitions and recalibration of market expectations for a Chinese hard-landing.

Tiger Airways Holdings Limited - Don’t expect a turnaround soon (CIMB)

UNDERPERFORM Maintained

S$0.93 Target: S$0.54

Mkt.Cap: S$507m/US$422m

Airlines

Rights issue analysts’ briefing

New management has returned to the market with more concrete plans to pull troubled Tiger out of its rut. However, we are still unimpressed, given near-term turbulence in Australia as well as Tiger’s inability to secure a new base elsewhere in Asia. We maintain our Underperform rating, earnings estimates and target price of S$0.54, still based on 8x CY12 P/E, the industry’s mid-cycle forward average. Tiger’s theoretical ex-rights price is S$0.81. Adjusting for its recent rights, our ex-rights target price will be S$0.46. De-rating catalysts could come from prolonged losses in Australia and an inability to secure a new base in Asia.

Takeaways

Potentially greater involvement by parent? Management remained tight-lipped on SIA’s potential involvement in the day-to-day operations of Tiger Airways. According to Acting CEO Chin Yau Seng, Tiger and SIA will continue to operate independently, though he does not rule out tie-ups.

Tiger Australia remains caged. Tiger Australia remains restricted to 18 daily flights in August and its ability to increase flights beyond August are subject to approval from CASA. Currently, only 3-4 of Tiger Australia’s eight aircraft are active on a daily basis, as a result of its 18-daily-flight restriction. While management is working hard with CASA to lift its flight restrictions, uncertainties continue to loom.

Fleet-management update. Tiger is expected to have 35 aircraft at end-FY12. Tiger will deploy 20 in Singapore and eight in Australia, as well as lease two to SEAIR in the Philippines. Management plans to deploy the remaining five to potential new bases, though such plans are subject to its success in securing a new base in Thailand, the Philippines or Indonesia. Management does not rule out the possibility of sub-leasing its planes should it be unable to absorb the additional capacity coming on-stream.

Pushing for a second Asian base. Tiger is attempting a JV with Thai Airways in Thailand and is looking for stake acquisitions in the Philippines and Indonesia to set up a new low-cost base in Asia. Management hinted that it is attempting to secure a base in Indonesia by end-FY12. Progress of Tiger’s proposed 32.5% stake acquisition of SEAIR has been hampered by complexities in the deal structure. Developments in Thailand remain uncertain.

Capital management. Part of the proceeds from the rights issue will be used to support pre-delivery and final-delivery financing. Management will also fund its aircraft delivery programme with internal funds and working capital. Moreover, Tiger will tap sale-and-leaseback transactions to monetise new deliveries.

Comments

Delays in lifting flight restrictions will prolong losses. Due to its 18-daily-flight restriction, Tiger Australia is only able to operate 3-4 aircraft out of its fleet of eight.

This means that at least half of its fleet is idle. Only by lifting its flight restrictions can Tiger Australia scale up its operations. Till then, Tiger Australia will continue to bleed.

Demand for Tiger Australia’s services still weak. Tiger Australia has resumed flights to three of Australia’s most popular domestic routes: Sydney (5x daily), Brisbane (2x daily) and Gold Coast (1x daily). Based on its existing routes and schedule, Tiger appears to be flying 16 times daily, below its maximum restriction of 18 flights. We believe this suggests very weak demand for Tiger Australia’s services, keeping in mind that its existing demand comes from forward bookings before its suspension, which would only support demand up until 29 Oct 11.

Playing catch-up with peers. In our previous note, we mentioned that Tiger is struggling to catch up with peers AirAsia and Jetstar. AirAsia has already launched AirAsia Philippines and AirAsia Japan. Jetstar has also ridden on the coattails of parent Qantas to enter the Japanese market. In our view, Tiger is a clear laggard in the race to expand its network in Asia.

Aircraft-cancellation and deferment risks remain high. Part of Tiger’s proceeds from its proposed rights issue will be used for aircraft pre-delivery and final- delivery payments. On a positive note, this signals management’s commitment to delivering newbuilds hrough 2015. However, we believe this also raises the risk of flight cancellations and deferment, which could be a major share-price de-rating catalyst. Tiger will be allocating five new aircraft to its regional joint ventures in Thailand, the Philippines and Indonesia, on the premise that it will be able to secure a new base in the Asia Pacific. Even if Tiger were to secure a new base in Thailand, the Philippines or Indonesia, Tiger would be operating in very tough markets with established incumbents in each market. Lastly, head-on competition with AirAsia, which already has a first-mover advantage in these markets, will not be easy. Potentially poor demand in these markets could force Tiger to defer additional capacity in the early stages of its expansion, we believe.

Valuation and recommendation

Maintain Underperform. Tiger continues to operate in a turbulent environment in the near term, and we believe it is too early to expect a turnaround. We maintain our Underperform rating, earnings estimates and target price of S$0.54, still based on 8x CY12 P/E, the industry’s mid-cycle forward average. Tiger’s theoretical ex-rights price is S$0.81. Adjusting for its recent rights, our ex-rights target price is S$0.46. De-rating catalysts could come from prolonged losses in Australia and an inability to secure a new base in Asia.

租户搬迁循序渐进

一般房东在租约届满后，就以为租赁工作完毕了。

事实上，处理租约届满后，租户搬迁还有相当繁杂的手续与问题必须面对，这包括书信上的正规程序、交接前的周详检验、退还按柜金的方法，以及处理租户拖欠水电费问题等。

这些看起来很小，但却很重要的事件，房东不得不知。

一般房东允许租户丢下钥匙就可以潇酒地搬走，当要找回前租户解决租赁期间所衍生的问题，才后悔之前没有按照正规手续来处理。

因为租户交回钥匙的那一刻开始，对房东与租户的关系有肯定的法律上意义。

而这其中最重要的必须始于提交通知信，停租通知信一般必须由租户呈予房东。

不论有意续约或中止租约，合约上规定租户必须在租期届满两个月前给予通知。房东若没有在预期内收到通知信，必须主动通知租户他的责任与权利。

确定租户迁出后，必须与租户沟通筹办搬迁手续与时间表，千万别假设租户会了解他们的责任与搬迁的程序。

精明房东会尽早让租户了解在迁出前，必须修理或更新设备或家具，这一般需要至少一个月时间。

双方全面彻底检验

在租户迁出当天，房东与租户都必须一起检验房子、家具、装潢、摆设、设备等状况，任何遗失或损坏，都必须记录下来。

若租户有进行结构性的装修，之前就必须决定要保留或恢复原状，千万不可让租户只局部拆除装修。

有利招租的装饰或装修，甚至可要求以打折代价向租户买下。

检验屋内时，必须非常小心和仔细，因为一些狡猾租户可能故意隐瞒损坏物件的事实，一旦新租户入住后被发现，到时欲追究则为时太晚。

任何必须修理的损坏，双方都必须当场达成协议，并签署赔偿同意书，若无法达致赔偿协议，可征求承包商意见，千万不可在没有达成协议之前接受租户交屋。

如果租户还有物件留在屋里，或有损坏的物件还未修好，也千万别接受租户的钥匙。

退还按柜金

为了确保租户在最短时间交回房子，应强调在租户补修房子期间，征收逾期退屋的租金。

另外，应要求租户提供联络地址或方式，以便退还按柜金或者处理一些无可预见的事情。

一般租户都会要求将最后两个月租金以按柜金来抵销，房东千万不可接受，因为按柜金的意义是在于扣除租户拖欠的费用或房子损坏物件的赔偿。

另外，在接受租户退还钥匙时，必须确保按柜金足够赔偿损坏或恢复原状的费用，或要求租户搬迁前妥善处理。

接受钥匙后，建议房东别即刻退还按柜金，但以书信通知租户一个肯定的归退日期，一般是在14天内。

这期间，房东必须确保所有门匙、信箱钥匙、停车卡或粘贴、收费电视、电话费、互联网衔接费，已缴清并中止服务等等。

缴清公共服务费

一般上，房东也向租户征收水电押底金，若押底金数额不敷未缴清的水电费，可要求动用按柜金来补足。

如果水电户头是租户名下，必须要求在退房当天终止服务及关闭户头，确保没有拖欠任何账单。

其他的公共服务费用，诸如英达丽水服务费、垃圾费、清洁费等，也必须确保全部缴清。

为了缩短空置期，房东应尽早确定租户搬迁的日期，并在租约赋予的权力下，在租约中止的两个月前，把房子交给中介商开始物色新租户。

一般租约规定，租户决定约满后迁出，必须允许房东或代理，带有潜能的租户上门看屋。

这期间，要与现有租户维持良好的关系，否则，若租户不合作，肯定妨碍招租进展。

租约届满搬迁通告

致：[租户姓名]_______以及所有居于现址的租客[地址]_______通告即日生效，从发函日算起的60天内租户必须迁离现址，并在最迟_____/_____/____把房子恢复原状交还房东或中介。

通告阐明，房东是根据租约第_______条款终止租约，租户若不能如期搬迁，房东将每天以双倍计算逾期租金，而且也针对租户的非法逗留行为保留诉讼权，以便索讨可能的房屋损
坏赔偿，以及索回拥屋权。租户也受吁在向房东归还房屋前缴清所有拖欠的租金和水电费。

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http://www.nanyang.com.my/node/379141?tid=691