New malls will underpin earnings growth. CMA’s share price may have corrected by 11% since Bernanke’s Congressional Testimony on 22 May, but we see this as an excellent buying opportunity for the stock. In the near-term, the opening of new malls will continue to be a key earnings driver, supported by positive rental reversions. Reiterate BUY, with a TP of SGD2.51, suggesting an attractive upside of ~40%.

Soon-to-open malls achieving strong commitments. Bedok Mall, which is set to open in 4Q13, has already achieved ~100% committed occupancy. The mall will have a wide range of retail and F&B offerings, including Tim Ho Wan, the immensely popular dim sum restaurant. Westgate, scheduled to open before Christmas, is >80% committed. Among the committed tenants are COS (Collection of Style) – the upmarket line from H&M, and Coach, which will open its first suburban boutique in Westgate. By our estimates, these two malls will contribute ~SGD20m of net property income per annum on a stabilized basis.

Jewel in the bag… probably. CMA has signed a Memorandum of Understanding with the Changi Airport Group to jointly develop the concept and plans for Project Jewel. Project Jewel is the redevelopment of the open-air car park at Terminal 1 into an integrated development with retail outlets and leisure attractions with a total GFA of 1.3m sq ft - bigger than ION Orchard. We expect more details by the end of the year, including whether CMA will be offered an equity stake.

Still sanguine on China. We remain positive on CMA’s presence in China as we believe that the urbanization process and the economic transformation will continue to spur domestic consumption. Besides benefiting from the ten malls and two extensions which are expected to be completed within the next 4-5 years, CMA will continue to scale up in Beijing, Shanghai, Chengdu, Chongqing and Wuhan.

Reiterate BUY. CMA remains our top-pick in the Singapore property sector with a TP of SGD2.51. New acquisitions could be near-term catalysts, while the labour crunch in Singapore may limit rental reversion upside at its Singapore malls.

Source: Maybank Kim Eng Research - 6 Sep 2013