CMA

CMA: CS maintains O/P with $2.14 TP. House conducted a bottom-up analysis of the retail sector in13 major cities and ranked them by demand, supply and operational outlook and subsequently split the cities into three sub-categories. Of the five mall operators house looked at, CMA ranked well with 25% of portfolio in “Good” cities, 43% in “Neutral” and 5% in “Bad” cities, mainly due to three malls, including CapitaMall Wusheng, Wuhan; but note that the mall opened only in 3Q12 and has secured 80% pre-leased. With a pan-Asia portfolio of 101 retail assets across 52 cities, CMA can provide differentiated products versus its peers by tapping into its regional tenant pool. Also, many retailers are keen to work with CMA due to its large regional footprint, like Kate Spade which opened its first Shanghai outlet with CMA. Overall, maintain OUTPERFORM on CMA, a proxy to China’s consumption growth (China malls = 36% of RNAV). Expect cash flows to improve as the China malls stabilises and the malls under construction are completed. CMA trades at 1.07x P/B (30% discount to RNAV).