CRCT

CRCT: 4Q15 distribution buffered by tenant sales, stronger Rmb
CapitaLand Retail China Trust's (CRCT) 4Q15 DPU came in at 2.59¢ (+4.4% y/y), in line with street estimates.

Gross revenue inched up 0.4% to Rmb253.3m, underpinned by rental growth at CapitaMall Qibao (Shanghai) and CapitaMall Saihan (Huhhot), but partially offset by lower contribution from CapitaMall Wuhu (Wuhu) on lower occupancy due to tenancy adjustments, and absence of a one-off forfeiture of security deposit at CapitaMall Xizhimen (Beijing).

However, NPI slipped to Rmb158.9m (-1%), weighed by higher property expenses due to a AEI-related compensation to a tenant and stamp duty fee paid by CapitaMall Anzhen (Beijing) for the amendment of lease agreements, slightly mitigated by the reversal of an overprovision of property tax.

In 4Q15, shopper traffic across CRCT's 10 malls crept up 1% y/y, but lightened 6.6% q/q. For the full year, the average daily number of shoppers increased 1.8%.

Conversely, tenant sales remained strong in 4Q15 (+3.6% y/y, +1.7% q/q), resulting in a 11.6% surge in average monthly sales in FY15.

Distributable income grew 6.5% to $21.8m, due to the stronger RMB/SGD.

Portfolio occupancy improved to 95.1% (+0.3ppt q/q) with weighed average lease to expiry of 8.2 years, while aggregate leverage eased to 27.7% (-0.8ppt q/q) with average debt cost maintained at 2.99% and tenor of 2.18 years.

For 2015, China's economy grew 6.9% in 2015, with retail sales expansion of 10.7%. Management believes CRCT's offering of family-oriented malls are well-placed to benefit from the country's growing urban population and rising retail sales.

At the current price, CRCT is trades at 0.82x P/B and offers an annualised 4Q15 yield of 7.2%, not as attractive compared to Chinese retail mall REIT peer Mapletree Greater China Commercial Trust of 0.7x P/B and 8.8% yield.