Central Pattana

Central Pattana Plc (CPN)
 

Core profit as expected: CPN reported a 4Q11 net profit of Bt692m, up by 11% YoY and 78% QoQ. The figure was 38% above our estimate, due to Bt187m in reversals of provisions for impairments at three properties (Chonburi, Chiangmai 2 and Rama 2). Excluding such items, core profit was Bt505m, down 9% YoY but up 30% QoQ and in line with our estimate. FY11 net earnings came to Bt2.06bn, up 83%.
Results highlights: Although three properties (Lardprao, Ram Indra and Pinklao) closed temporarily during the flooding, rental revenue still expanded by 13% YoY and 12% QoQ to Bt3bn, thanks to higher rents at all locations, the re-launch of Lardprao and the openings of the Pitsanulok and Rama IX malls. Rental margin was 37.9%, flat YoY but up 510 bps QoQ, led by the re-launch of Lardprao.
Food revenue grew 26.7% YoY to Bt177m, thanks to a stronger performance by food centers at Pattaya Beach and additional new food space at Chiangrai and Pitsanulok.
CPN announced a dividend of Bt0.37/share, XD on May 8.
Outlook: Profit should be even better in 1Q12, given an absence of flooding, full-quarter contributions from two new malls (Pitsanulok and Rama IX) that opened in 4Q11, higher occupancy and rental rates at Central World and contract renewals at Pattaya Beach. We expect robust YoY growth in each of the next four quarters, due to the low base effect—Lardprao closed for renovations, Feb-August 2011, and 4Q11 numbers were dampened by the flooding.
The key near-term catalysts include the gain from spinning off Central World office building to a property fund and the insurance payouts for damage claims and business interruption at Central World.
What’s changed? Our FY12 forecast and target price remain unchanged.
Recommendation: With 23% upside to our YE12 target price, our BUY rating stands.