CRCT – DBSV

Portfolio remixing in progress

• DPU of 2.08 Scts in line with estimates

• Portfolio performance stable; AEI in Saihan yielding results

• Maintain HOLD given limited upside to raised TP of S$1.30; CRCT offers a total return of 12%.

DPU of 2.08 Scts in line. Topline and net property income were flattish at S$29.8m (-0.2% yoy, +0.7%qoq) and S$19.0m (+4.3%yoy, -3.8%qoq) respectively, due to a stronger S$:RMB exchange rate. Distributable income came in 3.2% higher, translating to a DPU of 2.08Scts.

Portfolio performance remains stable, enhancement works (“AEI”) in Saihan yielding positive results. In RMB terms, the portfolio delivered a topline growth of 4.5% yoy to RMB 147.2m. The improvement was portfolio wide with average occupancy levels inching up to 97.3% (against 95.0% a year ago), backed by stronger tenant sales growth of 24.9% yoy and 10.1% qoq. A major contributor came from Xizhimen Mall (recorded new contribution from Beijing Hualian Supermarket in Basement 1) and Wangjing Mall, which enjoyed higher rental revenues and occupancy rates. Sequentially, topline remained stable but we note that Saihan, Xinwu Mall – smaller malls in the portfolio have shown a sustained improvement in operational performance. Qibao Mall, however, reported lower revenues as it is undergoing asset enhancement and tenant remixing program. Looking ahead, we expect single digit uplift in topline as the manager continues to fine-tune the tenant profiles in order to attain the optimal portfolio mix and offering to consumers.

Renewed S$200m of short term loans. Renewed loans willextend debt expiry profile to 2.37 years from 1.01 years currently. Interest cover remains high at 6.2x.

Maintain Hold, TP raised to S$1.30. We maintain our HOLD call, given limited upside to our raised TP of S$1.30 after rolling valuation forward to FY11. CRCT offers forward yields of 6.7-6.9%.