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Thailand Property – Central Pattana Strong Q13 Results

By on Nov 21, 2013 in Property News, Retail

CPN reported a 3Q13 net profit of Bt1.46bn, down 49% YoY but up 14% QoQ. Stripping out an extra gain of Bt1.6bn from spinning off Central World Office to CPNCG last year, core profit rose 18% YoY, in line with our estimate.

Rental and service income increased 14% YoY to Bt4.9bn, led by 8percent same-store rental growth and the openings of the Suratthani and Lampang malls in 4Q12 and the Ubon Ratchathani property in 2Q13.  Rental margin expanded to 46.1% in 3Q13 from 44.9% in 2Q13 on improving operating leverage. On a QoQ basis, rental margin declined 95 bps, due to costs for the leaseback of a long-term lease at Central Plaza Bangna.

Core profit is expected to dip QoQ in 4Q13 because of high marketing expenses during the festive season and grand opening expenses for Central Festival Chiangmai (which opens today) and Central Festival Hadyai (will open on Dec 14). However, 4Q13 net profit is likely to be the highest of the year, boosted by an extra gain from spinning off Central Chiangmai Airport Plaza to CPNRF.

Our earnings forecast and YE14 target price stand unchanged for the moment. Our profit projection would be subject to an 84% upgrade if the planned spin-off of Chiangmai Airport Plaza were to be executed. CPN remains our favorite play in the Consumer sector. The company has proved to be resilient to the consumption spending slowdown, while there is scope for upside to our earnings projection. Our BUY rating stands with a YE14 target price of Bt61.

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