ARA Asset Mgt

ARA Asset Mgt: 2Q results in line. Net profit of $14.7m, +17% yoy, driven by higher Reit mgt fees, as well as improving margins. Co declared interim div of 2.3cts.
Total AUM increased 36% yoy to $18.8b, mainly boosted by the listing of Hui Xian Reit, as well as an increase in the portfolio value of existing Reits. The group is on track to achieve its medium term target of $20m AUM.

ARA secured US$300m of capital commitments for the launch of its 2nd Asian Dragon Fund (ADF II) in Jul
‘11. Mgt noted that the ADF II capital-raising process was slower than expected as investors were unwilling to commit capital in such an uncertain environment. But said it was on track to raise US$1b in total by year end and commence investments in 4Q11. ADF II is expected to contribute 14% to the group's earnings in 2012.
Stock trades at 6x P/B, 15.7x P/E.
BOA-ML keeps at Buy with TP $1.85. Continues to like ARA for its stable fee-based income model and integrated platform that facilitates AUM growth. Expects ARA to outperform its pure property peers as growth in the physical property markets begins to moderate. Believes continual growth in AUM will lend support to the share price performance.
StanChart keeps at Outperform with TP $1.84. Tips possibility of equity fund raising to finance a higher capital base for fee income growth.