CMA

CMA: Remains CSLA’s conviction pick for its strong earnings growth of 36% In FY14, driven by earlier mall completions and firmer gross margins. Portfolio is strong and consists 104 malls across SG, CN, and JPN. China (44% of GAV) remains under-shopped, while Singapore (31% of GAV) and Japan (5% of GAV) provides a stable earnings stream. CSLA does not expect higher dividends on CMA due to the development of the China pipeline. Gearing is expected ~50% largely unchanged as acquisition of Jewel@Changi offsets divestment gains from Westgate Tower. In the near term, CLSA expects operating metrics for CMA’s China portfolio to be firm while Queensbay mall could be divested to CMMT. Furthermore, the house expects some uplift to valuation on its Japan portfolio as cap rate compresses. In the medium term, the set-up of a J-Reit and divestments of ION Orchard could drive another rerating of the stock. CSLA has a Buy on CMA with a TP of $2.62.