Meet CapitaMalls Asia's star performer in 3Q12

NPI of China malls grew 18.4%.

According to DBS Vickers, CMA reported a good set of 3Q results with a 71% rise in net profit to S$62.4m on a 53% increase in revenue to S$102m.

Here's more from DBS:

The improvement came across all its investment and management fee businesses, largely from leasing commission with the opening of 6 China malls during the quarter as well as higher contributions from the increase in stake in its Japanese malls and acquisition of Olinas Mall.

This was partly moderated by higher interest costs from drawdown of loans to fund new investments. YTD, it has achieved 87% of our full year forecast.

China was the star performer. Operationally, YTD NPI of China malls grew 18.4% y-o-y through a 9.4% increase in shopper traffic and 10.7% increase in tenant sales.

Within China itself, Tier 2 city malls continue to outpace with a 14.2% increase in tenant sales. Meanwhile Japan experienced a 12% hike in NPI on 8.7% and 2.3% growth in traffic and sales respectively. Malaysia and Singapore remained relatively steady y-o-y with flattish traffic and tenant takes.

Ramping up operations. Going forward, we expect 4Q earnings to be boosted by the opening of the Star Vista in Singapore in Oct as well as 6 new malls in China.

This is in addition to higher contributions from CMT and CRCT on completion of asset enhancement activities and speedier ramp-up of the latter’s properties.

From CMA’s perspective, with c70% of its China malls now operational and >60% of this going into their second to eighth year of operations, we believe the group is moving into a more accelerated earnings phase of its operations in China in the coming years.

This is in addition to the still robust consumption spending environment in China, with retail sales expected to grow 15% in 2012. Meanwhile Bedok Residences is >90% sold and we anticipate progressive recognition to impact FY13 earnings positively.

With its see through gearing at c40%, balance sheet remains in a healthy position despite the expected construction drawdown over the next 2-3 years.

Moreover, yield compression in its listed reit platforms have rendered them into more effective currency for the group and we believe the group would have even greater flexibility in its capital management exercises going forward.

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