ARA

ARA Asset Mgt: 3Q12 results broadly in line with consensus. Net profit fell 23% yoy due to the non-recurrence of 3Q11’s $16.6m performance fee from ARA Harmony Fund. Recurrent mgt fee income, however, rose 14% yoy, thanks to higher REIT mgt and portfolio mgt fees for CIP Fund and ADF II. AUM was $21.5b at end 3Q12, with mgt confident of hitting $22b on potential upward revaluations in the property portfolios of REIT’s under mgt and invmts by its newly set up private funds ADF II and CIP. Recall, ARA recently announced the suspension of the listing of Dynasty REIT. The group says it could relook it next yr if sentiment improves. CIMB says not all is lost, as ARA could still earn promote fees through divestments of assets to third parties, eg. ADF I recently sold Manulife Tower in HK at HK$3.3b, >40% above its purchase price. Mgt remains confident of AUM growth in the next few years. Overall decline in S-REITs’ equity cost amid yield compression should facilitate acquisitions by its REITs under management (such as Suntec REIT, Cache and Fortune REIT). In addition, it sees ample liquidity and opportunities to raise funds in markets like China and Japan. CIMB keeps at Outperform, raises TP to $1.81 from $1.74. Macquarie maintains Outperform, TP $1.93.