CMA / Capitaland

CMA / Capitaland: CS maintains O/P rating on C-Land and CMA, with $4.50 & $2.54 TP respectively. House note that although China makes up over half of CMA’s total assets, net profit from China is barely a third as majority of its malls are still in stabilisation phases or yet to be opened. House expect earnings visibility on China to improve as more of its malls complete and stabilise. Add that although CMA may be trading at 1.32x P/B, this is based on 3Q12’s actual $1.64 NAV, which is likely to be revalued upwards with better rents (esp. post AEIs) and completion of properties. Add that CMA continues to be a strong proxy for China’s consumption growth, view, with expected near-term retail sales growth of 16–17%. Following increase of CMA’s target price from S$2.14 to S$2.54, house subsequently raised TP for Capitaland to $4.50 as housealso trimmed the discount to RNAV from 20% to 15%, which is now more in line with CAPL’s historical average.