Central Pattana

Central Pattana Plc (CPN)

What’s new? We accompanied CPN’s SVP of Finance, Ms Naparat Sriwanvit, to meet with local institutional and retail investors. Overall, investor sentiment toward the company was very positive. The short-term story is colored by upbeat rental growth and gains from asset spin-offs, while the long-term theme is an aggressive expansion plan, which now looks more concrete than ever. We maintain our conviction BUY call with a YE13 target price of Bt74.
Target same-store rental growth of 7-8%: Ms Naparat said that the current good shopping sentiment should continue into next year. CPN expects double-digit same-store rental growth for 2H12; its growth target range for FY13 is 7-8%, slightly higher than our estimate of 6.7%.
Eyes on 50 stores domestically! The time-frame for the plan of opening three shopping malls per year in Thailand seems to have expanded to a longer period than the market currently assumes. The SVP of Finance said there are currently at least five locations in greater Bangkok and 20 sites in the provinces for which CPN is considering building new shopping centers. The implication is that the firm could maintain the plan to open three new stores a year till at least 2021. At that time, CPN should have around 50 shopping malls nationwide, up from 18 currently.
Note that we have yet to factor in the new stores that are to open from 2014 onward. In other words, our YE13 target price of Bt74 is based on only the performances of 23 stores.
First overseas mall may open in 2015: CPN recently signed an MOU with I-Berhad to develop a shopping center called i-City Mall on an 18-acre (45-rai) land plot in Shah Alam, Selangor State, Malaysia. CPN will hold 60% of the planned project and will be the shopping mall manager. The development budget is Bt5bn and the mall will have 150K sq.m of retail space. Construction is expected to start early next year and finish in 2015, assuming that the project proceeds as planned.
CPN is also looking for other offshore locations; Malaysia and Indonesia are the priority targets. Note that any ex-Thailand store openings would be in addition to the plan to roll out three locations a year.