Central Pattana
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Decent 4Q15 results as expected BUY
Central Pattana Plc (CPN)
In step with model
CPN reported 4Q15 earnings of Bt1.9bn, up 5% YoY and 5% QOQ. The figure was consistent with our estimate.
Results highlights
Rental and service income rose 15% YoY to Bt6.6bn, while the same-store rent inched up 2.2% YoY in 4Q15 thanks to improved sentiment for shopping spending late in the quarter. Same-store rent for FY15 rose 2.5%.
Rental and service margin increased to 47.4% in 4Q15 from 47.2% in 3Q15 due to higher occupancy rates at new malls, particularly Westgate and Rayong.
F&B Revenue rose 24% YoY to Bt306m, driven by new food courts at new shopping malls and the re-opened food center at Pinklao.
Hotel revenue dipped 2% YoY to Bt264m due to weaker performance of Centara Udon Thani. Hilton Pattaya has continued to perform well, with a 10% YoY increase in RevPar in 4Q15.
SG&A expenses expanded 10% YoY to Bt1.35bn due to the increase in personnel expenses from expansion as well as expenses related to residential projects.
Outlook
We expect YoY earnings growth to be in an accelerating trend for at least the next three quarters thanks to improving performance of new malls and a jump in revenue from Pinklao due to its facelift.
What’s changed?
Our forecast and target price have remained unchanged.
Recommendation
CPN’s growth profile is improving, while its current valuation looks very attractive. It is trading at an FY16 PER of 22.3x, versus its long-term average of 26.5x. We maintain our BUY call with a YE16 target price of Bt63.50.
