CRCT

CRCT: 3Q13 results in line. Distributable income edged up 2.1% y/y to $17.1m, mainly due to higher revenue growth contributed by better tenants’ sales and higher rental reversions at CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan, that offset the absence of contributions from CapitaMall Minzhongleyuan (MZLY), which is currently undergoing asset enhancement works. DPU however, dipped 6.6% to 2.26¢ due to the issue of 57m new units via a private placement in Oct. Annualized 9M13 DPU of 9.29 cts translates to a yield of 6.7%. Mgt remains upbeat about the market outlook for China’s retail sector, underpinned by China’s total retail sales having growtn 12.9% to Rmb16.9t in 9M13. Exluding MZLY, CRCT noted its tenants’ sales at its multi-tenanted malls grew by a healthy 10.1%. With regard to its proposed acquisition of Grand Canyon Mall, CRCT has submitted the application to the Chinese govt and expects to receive official approval before year end, with expected completion by 1Q14. The target NPI yield of the mall in the longer term is 7-8%. OCBC maintains Buy but places its TP $1.58 under review.