Central Pattana

Central Pattana Plc (CPN) 

 

- Central Westgate: positive feedback, 95% occupancy rate 

Yesterday, we visited Central Westgate, CPN's 28th shopping complex located on a 100-rai land at the Bang Yai Intersection between Kanchanapisek Road and Rattanathibet Road with the second largest leasable spaces of 82,000 sq.m (following Central World), which was opened on August 28. Central Westgate was well-received with 85% occupancy rate on the opening day, possibly rising over 90% by the end of this year (95% already under reservation at present). 42% of Central Westgate's leasable spaces are fashion shops, 21% are restaurants, and another 37% are Tops Supermarket, entertainment centers, financial institutions, and tutoring schools. The average rental rate is B1,300/sq.m/month. Visitor traffic on the first three day was as high as 200,000 per day. Being the largest shopping complex in western Bangkok, the area with integrated transportation system, Central Westgate provides a wide range of goods and service satisfying any types of lifestyle. In the next two years, a new IKEA Store will be opened on a 20-rai land and connected to CPN's shopping complex, ensuring Central Westgate's higher visitor traffic in the future. 

- New shopping complex to boost 2H15 profit 

CPN's profit is projected to grow remarkably amidst the weak economy because most of its income comes from rental, which is projected to increase thanks to the four new branches opened this year: Central Rayong and CentralFestival Phuket 1 (opened in 2Q15, fully generating income in 2H15), Central Westgate Bang Yai, and CentralFestival East Ville (opening October 2015). Income from existing shopping centers is projected to advance 4% on average since average rental rate would rise by 2-3% and common areas would grant higher income. Although the bombing incident depressed Central World's visitor traffic by 30-40%, the situation has improved and no tenant has asked for rental discount yet; the situation needs to be monitored two weeks longer. We maintain our earnings forecast, projecting CPN's profit to grow 15%yoy to B8.34bn. 

- Condominium plans: additional upside 

FY2015 fair value (DCF, 8.2% WACC) is B66.00, implying 47% upside; we reiterate BUY. According to the meeting, CPN plans to use freehold lands in provincial shopping center areas (excluding Pattaya) to develop new condominiums worth of B0.8-1bn, focusing on middle- and high-income customers. This plan is currently under feasibility study; a few condominiums would be launched to see if the plan works. In addition, CPN has five plots of land (two in Bangkok, three in other provinces), ready for new shopping centers to be opened since 2017 onward.