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CMA: Solid FY13 Performance With Jewel-liked Pipeline
Corporate Digest | 14 February 2014
By: Peter Ng
Articles (81) Profile

For the quarter ended 31 December 2013, CapitaMalls Asia (CMA) posted an 8.7 percent decline in revenue to $103.7 million from $113.6 million in 4Q12. The weaker revenue performance was on the back of lower leasing commission and project management fee generated from China as fewer malls were opened in 2013, coupled with lower contribution from Japan amid weakening of the JPY against SGD. Excluding the effects of reclassification of certain staff costs from revenue to cost of sales for operations in Singapore, revenue for 4Q12 would have been $104.5 million, cushioning the drop in 4Q13’s revenue.

Helped by lower costs of sales, administrative expenses and finance costs (declines of 13.5 percent, 18.7 percent and 16.3 percent respectively), the company recorded stellar performance of 17.1 percent gain in earnings to $216.4 million for the quarter. For the full year, revenue recorded a moderate 5.3 percent increase to $380.4 million, due to full year contributions from The Star Vista (Singapore) and Olinas Mall (Japan), while earnings shot up 9.9 percent to $600 million.

Excluding the phase two development of CapitaMall Fucheng in Mianyang, China, CMA has targeted for four new shopping malls to be opened in 2014, two each in China and India. Currently, the company has 51 operational malls in China and two in India. The company perceives its strategy as opportunistic and has given indications that significant opportunities for growth are still left untapped in these countries, particularly the first-tiered city of Guangzhou and Shenzhen, China.

Back in the Lion City, with the recent launch of Bedok Mall and Westgate, these developments will contribute to CMA’s topline fully in 2014. In conjunction with sales of condominium units in Bedok Residences and office strata units in Westgate Tower, the company will be able to recognise these profits in 2014 as well. Within the company’s pipeline, Project Jewel, a $1.5 billion integrated development consisting of retail, airport and hotel facilities as well as attractions, has a gross floor area of 1.4 million square feet. According to the company, “the development will not just be another Tampines Mall” but one which has a unique set of new-to-market retail offerings and concepts, aimed to serve the large population of tourists, airport passengers and Singaporeans in the Changi district.

An interesting question posted during the media session includes how the management plans to deal with competition in view of the highly competitive nature of shopping malls. With regard to the question, the management perceives that competition is inevitable and thus is not the focal point, rather, the focus should be placed on assessing the ability of managers towards differentiating their shopping malls from others. A shopping mall which is able to successfully differentiate itself from other competing ones will be able to attract more shopper traffic, generate higher sales, thus translating into higher rental revenue for the company.

Such claims can definitely be backed by an average 2.3 percent, 4.7 percent and 7.9 percent year-on-year growth between FY13 and FY12 in shopper traffic, tenants’ sales and net property income under CMA’s portfolio of shopping malls. Do you think CMA is able to maintain its performance at current levels?

Backed by a strong interest in investments, Peter's research spans across a range of industries, with his focus placed on companies listed on the SGX.

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