Central Pattana

Centrall Pattana Plc (CPN)

2Q12 profit at B1.17bn or 2.2x YoY growth and 10% QoQ 2Q12, net profit stands at B1,171m or an outstanding growth of 2.2x YoY and 10% QoQ due to the operation that aims to make continuous new high by B41,34m or an increase of 49.4% YoY and 5% QoQ which is a result of increased revenue in every shopping center especially Central World, Lad Phrao, new branches (Chiangrai, Phitsanulok and Rama lX) that were opened during 2011 and space expansion of Central Udon Thani in late of last March. The occupancy rate in every shopping center has increased to 98% from 94% in 2Q11 while the average rental fee has risen by 23% YoY due to increased rental fee in Lad Phrao and Udon Thani branches after new phases
were opened, and also the reduced rental discount in Central World. Meanwhile, the revenue in restaurant business has increased by 10% YoY from the shopping centers in Phitsanulok,
Udon Thani and Pattaya. For the hotel business, it has grown by 52% YOY due to Centara Udon Thani’s return of operation since the late of last year after a maintenance shutdown in 2Q11. The
gross margin has dashed to 44.3% from 31.6% while SG&A/sales has declined to 14.7% compared with 20% in the same quarter of prior year. The company’s financial structure at
end-2Q12 has net gearing dropping from the previous quarter by 1.16x.

3Q12 tends to peak due to extraordinary profit from selling assets
The company tends to shine in 2H12 especially in 3Q12 in which profit is projected to peak due to a plan to sell offices in Central World (worth of B4.2-4.5bn) to raise money for property fund,
so there might be a chance of extraordinary profit recognition for CPN from selling assets at not lower than B1bn. In terms of operation, there is still a continuous expansion due to increased
profit from the existing shopping centers. Moreover, 2 new shopping centers in Lampang and Suratthani (to be opened in 4Q12) will boost the earnings to thrive, urging FY2012 net profit
to B3,885m or the most magnificent growth of 89% YoY (recognition of asset selling isn’t included in our forecast).

BUY… 2012 FV at B57.00 with 18% upside
2012 fair value, using 9.4% DCF-WACC, is B57.00 with 18% upside. Accordingly, we reiterate our recommendation “BUY”.