Central Pattana

Central Pattana Plc (CPN)

Aim for 36 shopping malls in 2016 from 23 in 2013
For long-term strategy, CPN has planned for an aggressive business
expansion with totaling 35 shopping malls targeted in 2016 from 23
malls in 2013, or a total leasable area of 1.75 million sqm, an
increase of 11% a year. Details of 8 new shopping malls have been
disclosed so far, which include 3 Central shopping malls in 2013
(Ubon Ratchathani in April 2013, and other 2, Chiang Mai and Hat
Yai in 4Q13), 3 Central shopping malls in 2014 (Samui, Salaya, and
Rayong), Central West Gate Bang Yai in 2Q15 and a B5.8bn-wortrh
I-City in Malaysia (a joint venture with I-Berhad; CPN holds 60%
stake) with a total leasable area of 89,700 sqm in 2016. Moreover,
the company will join an auction for leasehold of 88-rai land in
Lumpini Park by August. From the investment plans mentioned
above, CPN has set an investment budget of B12-14bn, which will
come from internal cash flow, borrowings, and money from asset
sale to the property fund.

2H13 outlook remains bright from opening of 2 new shopping malls and asset sale
2H13 outlook is still prosperous. Every shopping mall is projected to
generate higher income; the steady growth would come from the
high occupancy rate of more than 95% and the average rental fee
hike of at least 5% (rental fee growth for existing shopping malls in
1H13 was 6.5%). Moreover, there would also be additional income
from full year income of new shopping malls in Suratthani and
Lampang (opened in 4Q12), a new shopping mall in Ubon
Ratchathani (opened in 2Q13), and 2 new – Chiang Mai 2 and Hat
Yai with combined leasable area of 128,000 sqm, which will be
opened in 4Q13. Moreover, the company also has a plan to sell
B12bn-worth Chiang Mai Airport shopping center to CPNRF, which
might generate an extraordinary profit after tax of around B3-4bn.
For FY2013, we estimate CPN’s norm earnings at B5.53bn, growing
25.5%yoy (the asset sale excluded). However, with the dilution
effect from PP capital increase of 130.368 million shares, norm EPS
in 2013 would increase 22%yoy.

Buy. 2013 fair value is B63.00, implying 48% upside
We reiterate BUY. 2013 fair value, using DCF-WACC of 8.4%, is
B63.00/share, implying 48% upside. Our forecast and fair value
have still not included the asset sale plan and a new project in
Rayong and Malaysia.