Central Pattana
Positive outlook intact
Central Pattana: Buy; Bt34.50
Price Target : Bt40.00
3Q11 net profit surged 131% YoY to Bt389m, due mainly to (i) closure of CentralWorld in 3Q10, (ii) opening of Central Chiangrai in Mar 2011, and (iii) higher rents at most properties. QoQ, profit grew 5% as Central Ladprao reopened on 28 Aug.
Positive outlook intact. 4Q11 result will be affected as CPN has to temporarily shut down Central Ladprao and Central Ramindra due to floods, but earnings should surge next year when all the properties make full year contribution. The opening of new malls including Central Rama 9 on 14 Dec 2011, Surat Thani in Jun 2012, and CentralFestival Chiangmai in 2013, will increase leasable area and help to drive growth over the next few years.
Maintain BUY. CPN remains one of our top picks in property, thanks to (i) strong 53% earnings growth this year and 51% next year, (ii) solid management team, and (iii) strong recurring income base from 17 successful shopping malls with 95% average occupancy rate. The stock now offers 16% upside to our Bt40 target price that is based on DCF metric, plus 1.4% dividend yield.
