Thursday, November 26, 2009

CMA shares climb 8.5% on debut

Shares of CapitaMalls Asia (CMA), Singapore’s largest public offering in 16 years, debuted 8.5 per cent above the IPO price yesterday.

The pan-Asian shopping mall developer and manager, which was spun off from property giant CapitaLand, started trading at $2.30 before losing some ground to fall as low as $2.23. It ended at $2.30, comfortably above the IPO price of $2.12.

Elsewhere, there were also strong debuts by Chinese property developer Fantasia and coal mining equipment maker Sany, which rose as much as 10 per cent and 45 per cent respectively in Hong Kong.

The new listings are the latest in a string of share sales across Asia as companies take advantage of the ongoing market rally. Funds are also flocking back to Asia in search of higher growth and large IPOs such as CMA’s are proving to be popular, analysts said.

In particular, CMA is seen to be attractive for its China exposure. CMA has a portfolio of 86 malls in Singapore, China, Malaysia, Japan and India worth some $20.3 billion in all. Fifty of these malls are in China.

‘CMA’s ownership and management interests in 50 retail malls (of which 18 are under development) in 33 cities in China make it a formidable player there, and also gives investors exposure to China’s growth from rising urbanisation and consumer demand,’ said CIMB Research analyst Donald Chua.

‘Recurring income from its more mature malls in Singapore, Malaysia and Japan provides additional support.’

CIMB yesterday initiated coverage on CMA with an ‘outperform’ call and a target price of $2.77.

CapitaLand, which now owns 65.5 per cent of CMA, said on Tuesday that the IPO saw strong response from international institutional investors, particularly from the United States and Europe.

There was demand of about 2.5 times for the placement tranche of 1.059 billion shares and an additional 174.8 million shares were over-allotted due to strong demand. CapitaLand raised about $2.8 billion from the IPO.

Looking ahead, CIMB’s Mr Chua said that he estimates CMA to consistently report earnings before income tax (EBIT) of $100-120 million a year, which should help take care of working capital and expansion needs in emerging markets.

Separately, CapitaLand announced that Lim Beng Chee, who is the chief executive of the newly minted CMA, has relinquished his role as chief executive of CapitaMall Trust (CMT).

The property trust, which runs 14 malls in Singapore, will now be helmed by Simon Ho Chee Hwee, who was previously the deputy chief executive officer. Mr Ho has also been appointed a director of CMT. Goh Hwee Peng, who was previously CMT’s head of investment and asset management, will now be the trust’s deputy chief executive.

CMA has a 29.8 per cent stake in CMT.

Source: Business Times, 26 Nov 2009

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