Central Pattana

Central Pattana Plc (CPN)

 

- 2Q15 profit to grow 8.8%yoy 

2Q15 net profit is estimated at B2bn, growing 8.8%yoy. CPN's leasable spaces have increased by 11% to 1.27 sq.m owing to the three newly-opened shopping centers, which are Central Salaya (mid-3Q14), Central Rayong (May 2015) and CentralFestival Phuket 1 (acquired in June). Given that average occupancy rate is 93% and average rental rate stays at B1,533/sq.m/month (excluding new shopping centers, rental rate of existing shopping centers grew by 2%yoy), total rental income is expected at B5.45bn, rising 8%yoy. Average gross margin is projected to rise from 48% in 1Q15 to 49.3% in 2Q15, and SG&A/Sales is expected at 15.4%. Overall, 1H15 normalized profit is estimated at B4bn, advancing 13%yoy. 

-  Two new shopping centers to be opened in 2H15 

CPN's 2H15 profit is expected to advance further as the two shopping centers opened in 2Q15 would generate income for a full quarter and two new shopping centers will be opened in 2H15: 1) Central Westgate Bang Yai with 82,000 sq.m leasable spaces (90% occupied) and average occupancy rate expected at least at 80% on the opening date of August 28, and  2) Central East Ville with 34,500 sq.m leasable spaces (90% occupied) opened in October 2015. In addition, existing shopping centers, especially those opened in 2014 (Samui and Salaya), will generate higher income. We maintain our full-year forecast, estimating net profit at B8.34bn, growing 15%yoy. 

- BUY for attractive upside. 

We reiterate BUY. FY2015 fair value (DCF, 8.2% WACC) is B66.00, implying 40% upside.