Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED
CapitaMalls Asia Limited: BUY; S$1.57; Bloomberg Code: CMT SP
Growing fee income
Price Target : S$ 2.06 (Prev S$ 2.02)
· Largest PE fund established to date
· Seed assets from CMA, rakes in divestment gains and lowers gearing
· Maintain BUY with TP of $2.06
First PE fund established since 2005/06, largest to date. CMA has
established a new private equity fund CapitaMalls China Development Fund
III (CMCDF III) with a fund size of US$1b. CMA will take a 50% share in the
fund with the remaining held by institutional investors from Asia and North
America. CMCDF III will invest in the development of shopping malls in
China and has a fund life of eight years. CMCDF III is CMA's largest
private equity fund established to date and will strengthen the group's fee
income model. Once fully deployed, it will increase CMA's total AUM (100%
basis) to cS$21b.
Realises divestment gains, lowers gearing for CMA. The fund will be seeded
with three assets valued at S$749.4m from CMA, namely CapitaMall Tianfu,
CapitaMall Meilicheng, both in Chengdu, and its entire 66% share in an
integrated retail/office development in Luwan, Shanghai. Post divestment,
CMA will have an effective 75% stake in Meilicheng and Tianfu and a 33%
share of Luwan. Currently under various stages of construction, these
properties have a relatively short gestation period and are expected to be
operational between 2013 and 2015. In terms of impact, CMA will recognise a
net gain of S$71.8m from the divestment of a partial stake as well as fair
value gain from its retained share. This is likely to be reflected in FY12
results. In addition, the group would also be able to generate fee income
from managing the fund, in the medium term. With the divestment, its
debt-to-asset ratio is expected to decline marginally, by c.3%pt to mid 30
+%. This leaves more headroom for further capital recycling into new
investments.
Retain BUY call. We maintain our BUY call with a slightly higher TP of
$2.06, after adjusting for this transaction and the higher share price of
its listed subsidiaries/associates.
Company Name: CAPITAMALLS ASIA LIMITED
| Research House: DBS Vickers | Price Call: BUY | Target Price: 2.06 |
CapitaMalls Asia Limited: BUY; S$1.57; Bloomberg Code: CMT SP
Growing fee income
Price Target : S$ 2.06 (Prev S$ 2.02)
· Largest PE fund established to date
· Seed assets from CMA, rakes in divestment gains and lowers gearing
· Maintain BUY with TP of $2.06
First PE fund established since 2005/06, largest to date. CMA has
established a new private equity fund CapitaMalls China Development Fund
III (CMCDF III) with a fund size of US$1b. CMA will take a 50% share in the
fund with the remaining held by institutional investors from Asia and North
America. CMCDF III will invest in the development of shopping malls in
China and has a fund life of eight years. CMCDF III is CMA's largest
private equity fund established to date and will strengthen the group's fee
income model. Once fully deployed, it will increase CMA's total AUM (100%
basis) to cS$21b.
Realises divestment gains, lowers gearing for CMA. The fund will be seeded
with three assets valued at S$749.4m from CMA, namely CapitaMall Tianfu,
CapitaMall Meilicheng, both in Chengdu, and its entire 66% share in an
integrated retail/office development in Luwan, Shanghai. Post divestment,
CMA will have an effective 75% stake in Meilicheng and Tianfu and a 33%
share of Luwan. Currently under various stages of construction, these
properties have a relatively short gestation period and are expected to be
operational between 2013 and 2015. In terms of impact, CMA will recognise a
net gain of S$71.8m from the divestment of a partial stake as well as fair
value gain from its retained share. This is likely to be reflected in FY12
results. In addition, the group would also be able to generate fee income
from managing the fund, in the medium term. With the divestment, its
debt-to-asset ratio is expected to decline marginally, by c.3%pt to mid 30
+%. This leaves more headroom for further capital recycling into new
investments.
Retain BUY call. We maintain our BUY call with a slightly higher TP of
$2.06, after adjusting for this transaction and the higher share price of
its listed subsidiaries/associates.
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