Perennail China REIT: Citi initiates with Buy Call and $0.61 TP. House believe that REIT has sharpened its competitive edge, with a good track record in the China retail property business; strong value creation to boost IRR and is well positioned in the sweet spot of China’s commercial segment without policy uncertainty. Expect a solid segment outlook to provide PCRT an environment to grow, but caution the premature status of its existing portfolio, as execution record is essential.
Forecast grp’s core Net Profit to grow at a 38.2% CAGR in FY11-15E. Amid market uncertainties, believe PCRT offers defensiveness through its retail exposure and recurring income. Co’s execution after completing the grand mall will be a key price determinant. TP is set at a 30% discount to an FY12E RNAV of $0.87.
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