March 21, 2016 OUTPERFORM Central Pattana (CPN TB ) Share Price: Bt48.25 Target Price: Bt58.0 (+20%) Conquering Southeast Asia Company Update Company Earnings expected to jump 23%/17% in FY16/17F, strongest growth among SE Asia peers despite fragile economy Potential upside to earnings if CPN converts CPNRF into REIT, expected to be finalized by 2Q16 Reiterate OUTPERFORM and Bt58 TP based on DCF; attractive valuation at 22.4x FY16F PE vs 28.6x average over FY13-15 Most promising retail space developer in SE Asia CPN is primed for a rerating. It is expected to register the strongest earnings growth among SE Asia peers in FY16F (+23%) and FY17F (+17%) compared with 18% and 9% regional average, respectively. This would be driven by the opening of five shopping malls in FY15-16 Kittisorn PRUITIPAT, CFA, FRM that will expand total leasable area by 15%, 3-6% higher rents, and 662 - 659 7000 ext 5019 high occupancy rate of 95%. CPN has been registering positive
[email protected] COMPANY RESEARCH | RESEARCH COMPANY earnings growth in the last seven consecutive years despite a shaky economy, suggesting limited downside to our forecasts. Synergies with Key Data Central Group, which owns leading retail and restaurant chains and 12-mth High/Low (Bt) 50.5 / 39.8 54% stake in CPN, would also ensure the success of future projects. Market capital (Btm/US$m) 218,790 / 6,277 3m avg Turnover (Btm/US$m) 251.7 / 7.2 Potential upside from converting CPNRF from a property fund into Free Float (%) 49.0 REIT Issue Shares (m shares) 4,488 The management is considering several options: (i) convert CPNRF Major shareholders: (27% stake) into a REIT, (ii) set up a new REIT, or (iii) raise capital at - CENTRAL HOLDING COMP 26.2 CPNRF to renovate existing properties to enhance yields.