FY13 core PATMI was in line with expectations, growing 40% YoY to SGD246.3m following full-year contributions from The Star Vista and Olinas Mall.

Malls continued to enjoy high occupancy rates of >96% in China, Malaysia and Japan, and 99.3% in Singapore.

Maintain BUY with TP of SGD2.60, pegged to a 10% discount to RNAV. Reiterate CMA as our top pick in the Singapore property space, with visible earnings growth in FY14-15.

What’s New

CMA’s core 4Q13 PATMI came in strongly at SGD60.9m (+54.4% YoY, -6.5% QoQ), thanks to contributions from The Star Vista, Olinas Mall and Bedok Residences, offset by higher-than-expected

taxation. Robust same-mall NPI growth rates were registered for its malls, in particular in China (+13.1% YoY) and Malaysia (+8.7% YoY). This was underpinned by healthy tenants’ sales growth and high committed occupancy rates.

What’s Our View

Despite concerns over slowing consumption growth in China and competition from e-commerce, CMA’s China malls continued to enjoy tenants’ sales growth of 10.1% in FY13 (11.0% if excluding Tier 1 cities). Management attributed this to shoppers’ growing familiarity with its tenants and its regular refinement of trade mix.

The two China malls expected to open in 4Q14 are Tianfu Mall and CapitaMall SKY+ in Baiyun, Guangzhou. Management is eyeing initial yields of 4-5% for both malls, which will underpin its earnings growth in FY15.

CMA’s balance sheet remains strong with SGD1.0b in cash and a net gearing of 0.22x. This provides ample headroom for opportunistic acquisitions.

Source: Maybank Kim Eng Research - 14 Feb 2014