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CRCT Rings In Positive FY13 Results And Stronger Portfolio For FY14
Corporate Digest | 29 January 2014
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By: Ong Qiuying
Articles (131) Profile

CapitaRetail China Trust (CRCT) reported its full year results today, raking in a 4.9 percent growth in gross revenue to $160.1 million and a 3.4 percent increase in net property income to $103 million. For the quarter, gross revenue was up 8.9 percent to $41.2 million while net property rose 6.6 percent to $25.8 million.

Notably, CRCT enjoyed a higher revenue growth at CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan, contributed by higher rental reversions and partially offset by CapitaMall Minzhongleyuan, which has been closed for asset enhancement works since July 2013. The group’s strong results were also lifted by the favourable exchange rate between the Singapore dollar and Renminbi.

Significantly, CRCT’s results has shown a strong improvement; excluding the impact of China Minzhongleyuan and CapitaMall Grand Canyon, acquired on 30 December 2013, gross revenue was up 16.8 percent and 9.1 percent in 4Q13 and FY13 respectively.

At its results briefing, Tony Tan, chief executive officer of CRCT, attributed CRCT’s healthy growth momentum despite the cautious mood surrounding China’s market to the sentiment of the consumers. He explained that the government’s goal remains to rebalance the nation’s growth drivers and spur consumption, and along with the rising urbanisation rate and disposable income, CRCT can ride on this shift towards a consumption-driven economy.

CRCT’s Portfolio Updates
CRCT continued to register strong portfolio rental reversions of 17.5 percent in 4Q13 and 13.8 percent for FY13 excluding China Minzhongleyuan and CapitaMall Grand Canyon. Both tenant sales and shopper’s traffic improved and CRCT maintained a high occupancy rate of 98.2 percent.

Tan highlighted China Minzhongleyuan, which is on track to complete its asset enhancement works by 2Q14 and currently 71 percent leased and under advance negotiation, to start contributing to its results progressively upon completion. The newest addition to CRCT’s portfolio, CapitaMall Grand Canyon, is also expected to have a full year impact on its earnings this year and committed occupancy has improved from 92.7 percent before acquisition to 95.9 percent as at 31 December 2013 and is expected to rise to 98 percent.

Partly financed via onshore short term loans, the newest asset is expected to weigh on its net gearing and overall net debt although CRCT is paying down these loans currently. Despite so, majority of its debt (about 88 percent) have been fixed-rate hedged, partially mitigating the uncertainty around the interest rates levels. Average cost of debt remains low at 2.6 percent in 4Q13.

Separately, CapitaMall Wuhu was also in the spotlight, having experienced negative rental reversions due to the challenging conditions in the area as government resettled some thousands of households. “[Nonetheless,] sales per square foot of the Wuhu mall have gone up, indicating that the quality of shoppers we attract are higher… and the mall still brings in good yields for the trust,” Tan commented. Despite lowering rentals, the new tenants attract more quality customers, which Tan notes the risk was well traded off.

Tan also maintain prudence in maximising returns from its portfolio. The company remains on the lookout for potential acquisitions and to relook into asset enhancement works for its existing assets such as CapitaMall Wangjing and CapitaMall Wuhu.

Given that all of CRCT’s assets would be fully operational by second half of this year, CRCT is expected to set new milestones going forward. CRCT opened at $1.305 today, up from its previous close of $1.295 and is trading below its net asset value of $1.48. CRCT announced a distribution per unit of $0.0433 for July to December 2013, bringing the full year distribution to $0.0902 for 2013 and represents a distribution yield of 6.8 percent based on closing price of 31 December 2013.

Qiuying oversees the construction and real estate investment trusts sectors at Shares Investment.

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CapitaLand Retail China Trust  1.530 -0.010 -0.65%   
Business: Co is a real estate investment trust with a portfolio of retail real estate across China.

Insight: Apr-19, 1Q19 gross revenue increased 1.1% in SGD t... Read More

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