ARA's net profit up 7% amid lack of performance fees

Expansion of its assets under management all set in 2013.

According to CIMB, FY12 net profit grew by a decent 7% yoy despite the lack of one-off  performance fees from ARA Harmony Fund seen in FY11. Performance was boosted by an S$11.3m fair value gain from held-for-trading securities, which added to a 13% rise in management fees from REITs and funds under management.

Here's more:

2012 AUM expansion met management’s target at S$2.3bn yoy. Management expectedly declared a final dividend of 2.7Scts (full-year dividend of 5.0Scts) whilst proposing a 1-for-10 bonus issue, translating to an overall 5.5% yoy increase in overall payout. 

AUM expansion in 2013. Management expects continued AUM expansion in FY13, particularly from its REITs. Although MBFC Tower 3 is now out of the picture for Suntec REIT, acquisitions could still be expected from Fortune REIT and Cache.

With ease of acquisition in the current environment, we now factor in S$0.8bn acquisition annually via its REITs. Despite the recently aborted attempt at listing Dynasty REIT, ARA intends to relook at plans when it is more confident of a successful listing. 

Downgrade to Neutral. ARA’s YTD outperformance of 10% vs. STI has taken valuations to a hefty 19x FY13 P/E. We see few compelling catalysts at this time, and downgrade the stock to Neutral from Outperform.

We will turn more positive with signs of a successful listing of Dynasty and new private funds. Our estimates have not factored in performance fees from ADF I.