Summary: CapitaRetail China Trust (CRCT) reported 1Q14 NPI of S$32.3m and distributable income of S$19.6m, representing a 25.0% and 13.2% YoY growth, respectively. DPU was up 3.9% to 2.40 S cents. This makes up 25.1% of our FY14 DPU forecast, which is in line with expectations. The improved performance was due to contribution from newly acquired CapitaMall Grand Canyon and strong rental reversions of 23.0% from its existing assets.

Management disclosed that the asset enhancement works for CapitaMall Minzhongleyuan is near completion, and that ~90.0% of the mall’s total NLA has been secured or in advanced negotiations for leasing commitments. With the mall’s scheduled reopening in 2Q14, we expect it to provide additional rental uplift to CRCT’s earnings. We keep our BUY rating on CRCT, but now place our S$1.54 fair value under review as we incorporate the results into our model.

Source: OCBC Research - 24 Apr 2014