CRCT

CRCT: 1Q14 results in line as distributable income raced 13.2% to $19.6m and DPU up 3.9% to 2.4¢, mainly from CapitaMall Grand Canyon's (Beijing) first full quarter contribution, partially offset by the absence of contribution from CapitaMall Minzhongleyuan (Hubei), which has been closed for AEI works since Jul '13. Meanwhile, gross revenue increased 22.4% to $48.1m and NPI accelerated 25% to $32.3m, supported by healthy rental reversion of 23% at its multi-tenanted malls. Overall occupancy held steady at 98.4% across its 9 retail malls (excluding Minzhongleyuan), with average lease to expiry of 9.6 years (by NLA). Traffic at its operational multi-tenanted malls dropped 3.3% q/q (+7.3% y/y), in line with tenant sales (-0.9% q/q, +14.3% y/y). Although aggregate leverage ratio lowered 0.8ppts to 31.8% and term to maturity lengthen 0.1 years to 2.46, cost of debt grew a full percentage point to 3.6% from the consolidation of RMB loans arising from CapitaMall Grand Canyon. Investors may be looking forward to Minzhongleyuan's re-opening in 2Q14, which has achieved committed occupancy rate of 90% at gross rental being 11.5% higher than management's initial forecast. At $1.46, CRCT trades at 1Q14 annualized yield of 7% and 1x P/B, in line with the Chinese retail peers' average Mapletree Greater China Commercial Trust, Fortune REIT and Perennial China Retail Trust.