Capitamalls Asia

Capitamalls Asia (CMA): At a post 3Q13 briefing, management highlighted that the upcoming two malls, Bedok Mall and Westgate, have achieved a strong pre-commitment rate of 100% and 85% respectively, are on track to open before Christmas this year. Meanwhile, CapitaMall Jinniu (Phase II) in Chengdu, China, which opened its doors on 29 Sep with over 90% occupancy, has an expected NPI yield of ~7% after its first year of operation. These factors should underpin CMA's FY14 earnings growth and further entrench its leadership position. CMA's healthy portfolio operating metrics validate its mall positioning as well as lease management abilities, with existing malls in Singapore recording 9M13 same-mall NPI growth of 3.8% y/y on the back of tenants’ sales growth of 3.2% psm, while malls in China are operating at a very healthy average occupancy rate of 97.2% and tenants’ sales growth at 9.8% psm y/y. CMA's cash position stands at a comfortable $1.2b, with outstanding commitments of about $930m. Maybank-KE estimate that CMA still has headroom for $500m worth of acquisition before its net gearing reaches 0.5x. One acquisition possibility is Project Jewel, the iconic development at Changi Airport, which the house believe CMA may be offered an equity stake in. Maybank-KE has CMA as its top pick amongst Singapore developers, and had raised its TP to $2.56, pegged to a 10% discount to RNAV. The counter is an attractive proxy to consumerism in the region. Latest broker ratings as follows: Maybank-KE reiterates Buy with TP $2.56 (from $2.51) Religare maintains Hold with TP $2.22 OCBC maintains Buy with TP $2.55 CS maintains Outperform with TP $2.58