CapitaMalls Asia badly beaten by 32% operating profits drop in China

Singapore home profits to the rescue.

According to Barclays, CMA's 3Q13 results were broadly in line. Its operating profit for China declined 32% y/y but this was more than offset by its other geographies, especially Singapore’s residential profits, Star Vista, ION and CMT.

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Jinniu Phase 2 opened in 3Q13, while we note more mall opening delays in India, after two Chengdu mall openings were pushed back a quarter ago.

CMA 3Q13 operating PATMI of S$65.1mn (+4% y/y, +21% q/q) came in largely in line with our and Bloomberg consensus, with 9M13 (+36% y/y) at 75-78% of FY13E estimates.

China’s PATMI was down 32% y/y to S$16mn as revenues fell 15% due mainly to lower contribution from management fee business as there were fewer malls opened in 2013, partially mitigated by better performance from the China funds.

Singapore’s PATMI jumped 36% y/y on profit contribution from profit recognition in Bedok Residences, opening of Star Vista and better ION and CMT. Malaysia’s PATMI grew 7% y/y to S$8.6mn while Japan grew 3% y/y to S$6.7mn.

At its China malls, which make up 47% of CMA’s property value, 9M13 operating statistics point to continued 7-25% NPI yield improvements at its China malls as same-mall NPI grew 12% y/y, and while shopper traffic was tepid at +1.5% y/y, tenant sales grew 9.8% on a psm basis.

NPI yield on cost ranged from 4.2% (for the 2010 vintage) to 10.1% (2007 vintage).