Monday, October 29, 2012
MCT: 2QFY13 results in line; strong operational momentum. Revenue and net property income (NPI) rose 15% on strong reversions in Vivocity and PSA Building (PSAB), contribution from Alexandra Retail Centre (ARC) and rent step up in BOA-ML Harbourfront office (MLHF). Vivo’s operational trends remain firm with 1H shopper traffic +7.5% to 26m (vs 6.5% in 1Q) and tenant sales rising 3.7% (vs 2% in 1Q) despite a no. of tenants fitting out. Firm occupancy at Vivo was sustained at 99.5% while 90% of leases due for expirty this FY have been re-let, highlighting the strong demand for space. Occupancy in ARC has increased from 50% to 64.7%, with an additional 11.2% committed. New tenants incl Bata, Umi Sushi and Inchiban Sushi. Separately, MCT undertook its maiden bond issue of $160m 3.6% fixed rate notes which has extended its debt maturity to 2.9 yrs with a slight increase in finance cost from 1.96% to 2.07%. MCT is currently trading at 1.3x P/B, offering 5.1% yield for FY13. Deutsche keeps at Buy with TP $1.33. Tips MCT as having one of the deepest acq pipelines, with the potential injection of Mapletree Business City (MBC) likely to be accretive, thereby being a catalyst to further boost valuations. CIMB keeps at Outperform, raises TP to $1.39 from $1.14, believes a strong 2H13 is in the bag. Credit Suisse raises TP to $1.38 from $1.20.