Equity Analysis /
Thailand

Central Pattana PCL: Core business recovery continues

  • Profit rises across all major business units expected for 2Q22

  • Only insignificant cost-push inflation effects

  • Higher profit forecasts reflect a strengthening 2H22 outlook

Bualuang Securities
27 July 2022

We expect solid 2Q22 numbers and a sustained earnings recovery through 2H22, led by heavier mall traffic (and supported by solid hotel and residential businesses). Our CPN core profit forecasts upsize by 16% for 2022, 9% for 2023, and 0.3% for 2024. BUY to a new DCF-derived target price of Bt76 (up from Bt74).

Profit rises across all major business units expected for 2Q22

Our 2Q22 core earnings estimate is Bt2,422m, up by 112% YoY and 5% QoQ. We assume revenue from core businesses of Bt8,368m, up by 40% YoY and 8% QoQ, with YoY and QoQ growth across all key units. Mall traffic recovered to 85% of the pre-COVID level during the quarter, so our 2Q22 rental income assumption is Bt7,408m, up by 37% YoY 4% QoQ. Although the mean rent discount to headline rates was unchanged QoQ at 16%, higher sales among tenants would have pushed up revenue-sharing income (the driver of QoQ rental growth). Moreover, the surge in foreign arrivals meant that the mean occupancy rate at CPN’s hotels rose to 60% (from 49% in 1Q22), supporting a QoQ ADR recovery. We also expect the company to recognize heavier residential project unit trans-ference for 2Q22 (Figure 5).