Central Pattana

Strongest among peers

Central Pattana Plc (CPN)

- To open ten new shopping malls in next three years

Regarding a business plan in the next three years (2015-2017), CPN is opening ten new

shopping malls (nine locally and one overseas), mounting the total number of its

shopping malls from 25 at end-2014 to 35 by 2017 and increasing its combined

leasable area to 1.8 million sq.m. or an increase of 10% a year on average. Seven out

of the ten projects have been revealed and are now in the process of construction,

which are Central Rayong, Central Westgate Bang Yai, and Central East Ville in 2015,

Central Nakhon Ratchasima and Central Nakhon Si Thammarat in 2016 (not yet

included in our forecast), and Central Phuket and a shopping mall in Malaysia in 2017.

In addition, the company has planned to renovate its two existing shopping malls

(Central Pinklao and Central Bangna) to increase the rental rate and attract more

traffic. The three-year business plan requires a budget of around B15bn each year,

which will come from operating cash flow, borrowings, and future asset sales to REIT.

- 4Q14 vigorous from all shopping malls

4Q14 profit is projected to grow substantially from 4Q13, thanks to increasing revenue

from four new shopping malls opened in the past 12 months. Occupancy rate of existing

shopping malls has remained good at 95%, while shared revenue from main lessees

(30% of total leasable area at present), would increase during the year-end spending

season as it depends on sales. Moreover, the average rental rate would increase from

renewal of three-year rental contracts of lessees, especially at Central Ladprao since

3Q14, plus its planned 5% rental rate hike, and at Central Rama 9 in November 2014.

Although SG&A tends to peak in the fourth quarter as a result of sales promotions,

4Q14 earnings are expected to still grow 37%yoy to B1.8bn due to higher rental

revenue; FY2014 normalized profit is estimated at B7.37bn or the growth of 24.6%yoy.

- Buy. High upside of 38%

We reiterate to buy CPN. 2015 fair value (DCF, WACC of 8.2%) is B64.00, implying as

much as 38% upside.