Courts Asia

Courts Asia: Inked an MOU with Sinar Mas Land to build-and-leaseback two megastores in Indonesia with an expected completion by 1H15, including an option for further partnership on the same terms. The first 170,000 sf megastore will be located at Bekasi, East Jakarta and has a lease of 28 years with an expected completion in 2014. The second 280,000 sf megastore will be at Serpong, BSD City and has a lease of 30 years with an expected completion within six months after the Bekasi store opens. The MOU take Courts Asia closer to realising the group's key growth driver for the upcoming years. Based on figures from existing retailers (Lotte and Giant) in the Indonesia market, management estimates that sales could average $250 psf upon completion and raise sales by ~14% or $112.5m based on group's FY13 (ended Mar) results. In addition to overseas growth, the group's expansion pipeline include another 100,000 sf of retail area in Malaysia in FY14 with an estimated $20m (2.5%) to growth in sales. The demand in its retail area expansion in both countries are supported by an increasing middle-class segment and growth for the retail industry. Further, the group's growth prospects will be supported by a resilient Singapore market (comprised 68% of sales in FY13), underpinned by the housing pipeline of 200,000 homes till 2016. The street has an unabated BUY rating with 12-month TP of $1.29 for Courts Asia.