CapitaMalls Asia

[winston]

Not vested

Singapore Hot Stocks-CapitaMalls Asia falls on poor Q1 earnings

SINGAPORE, April 25 (Reuters) - Shares of Singapore's shopping mall owner CapitaMalls Asia fell 2.2 percent on Monday after it reported worse-than-expected quarterly earnings, traders said.

At 0250 GMT, shares of CapitaMalls were traded at S$1.80 with over 1.6 million shares changing hands.

CapitaMalls said its net profit for the first quarter fell 24 percent to S$49.1 million ($39.8 million), weighed by a reduction in contributions from three malls that were divested to its real estate investment trusts. [ID:nSNZbkLQBr] "Their earnings came in below consensus' estimates.

Moreover, there may be some fund outflows from CapitaMalls and into the new listing of Perennial," said an analyst.

Perennial China Retail Trust, which owns shopping mall assets in China, is relaunching its S$840 million Singapore initial public offering in May. [ID:nL3E7FE04Q]

"Perennial may be more attractive as its valuations look cheaper than CapitaMalls Asia," said the analyst.

Source: Reuters

[iam802]

I was at Iluma near Bugis and noticed that Capital Mall is advertising for the empty shop space there.

Did they acquired the shop space there? Or are they managing on behalf ...?

I don't recall that Iluma is their project.

[LenaHuat]

CapitalMall Trust bought Iluma. 2day I tiptoed into the market to start collecting this ticker. It's my first stride. There is a big margin of safety to IPO price.

[Poles]

my impression of Illuma is, it has more air space than shop space...

[iam802]

hmm.. CapitalMall Trust will probably be able to do a better job than the previous owner.

I will start looking at this for more details.

[LenaHuat]

Yes, I am collecting this ticker over a period of maybe 3 months.

[winston]

Not vested. From Daiwa:-


What's new

Competitive pressure has intensified in CapitaMalls Asia’s (CMA) key markets.


What's the impact

We expect intensifying competition to lead to a slowdown in CMA’s capital recycling. We also expect the company’s rental growth to moderate in China, which could slow the pace of its divestments.

In addition, we believe CMA’s share price may not react positively until it improves its ROE through better use of its considerable cash holdings.


What we recommend

We have downgraded our rating for CMA to 3 (Hold) from 2 (Outperform). We have lowered our SOTP-based six-month target price to S$1.85 (from S$2.65), as we have adjusted up our cap-rate assumption for CMA’s malls in China by 50bps to 7.5-8.5% and have removed the S$1.8bn development premium we had attached previously to CMA.

We do not view CMA as a Sell, as on a fundamental basis its retail metrics continue to improve, and from a technical standpoint the stock is trading currently near its post-listing low point, at a lower 2011E PBR compared with its closest peer, Hang Lung Properties (Hang Lung) (101 HK, HK$33.80, 1), and below our fair value despite our more cautious set of assumptions applied than previously.

We see limited downside risk and scope for share-price appreciation if CMA makes a major acquisition given its high cash holdings, or carries out divestments given thenumber of completed malls it operates in its portfolio at present.

CMA trades currently at a PBR of 1.1x on our 2011 BVPS forecast.


How we differ

Our new target price of S$1.85 is the lowest among those of the Bloomberg consensus.

[LenaHuat]

I picked up this ticker @1.43 thinking that it was a bargain. But it was forced down to @1.41 at the close .
Waiting for iam802 to signal his long entries into the market.

[winston]

Not vested

CapitaMalls Asia Ltd – Company initiation (Bryan Go)
Recommendation: Buy
Previous close: S$1.44
Fair value: S$1.76


Investment Merits

· CMA is a good proxy to retail spending growth with its extensive retail mall network of 53 malls, and growing, in China .

· CMA acquired approximately S$2bil worth of assets in China , Malaysia and Singapore last year. It is targeting to spend the equivalent amount this year and its current strong cash position will enable CMA to do so comfortably.

· In the medium term, CMA is targeting to increase its portfolio of malls in China from the current 53 to 100 in five years.

· Only 66 out of the 92 malls under CMA portfolio is currently operational and the remaining will be opened gradually over the next 4 years. This implies its recurring income will be further strengthened over the period.

· Proposed 3G Malls to shorten construction time of malls from 3 years to 2 years. We see that as a potential for CMA to enhance capital turnover and improve ROE if implemented successfully.


Key Risks

· Poor deployment of capital with possible investment in NAV destructive assets may impact our RNAV estimate. On the other hand, failure to deploy cash into investment will weigh on its ROE.

· Longer gestation period of mall could slow yield growth

· Inflationary pressures are prevalent in developing Asian countries like China and India may lead to higher borrowing costs.

· We initiate coverage on CMA with Buy recommendation at fair value of $1.76, pegged to 10% discount to RNAV of $1.95, representing a potential upside of 22.1% from its latest closing price.


Source: Phillips

[LenaHuat]

I picked up this ticker @1.43 thinking that it was a bargain. But it was forced down to @1.41 at the close .
Waiting for iam802 to signal his long entries into the market.

Things are looking up . Consumerism is hot in China.