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Phoenix Mills
Overweight
PHOE.BO, PHNX IN
4Q FY11 results: Earnings beat driven by higher other
income; operational performance remains stable
• 4Q FY11 results: Phoenix reported 4Q FY11 net income of Rs272MM
(+14% Q/Q, 73% Y/Y) ahead of our estimate of Rs242MM primarily on
account of higher other income (Rs141MM in 4Q vs. Rs71MM in 3Q).
While revenues at Rs468MM were up +4% Q/Q on higher revenue share
from HSP, the impact on EBITDA was offset by higher other
expenditure (+27% Q/Q). 4Q EBITDA margins stood at 69% vs. 72%
for 9M FY11. The tax rate too rose during the quarter to 30% (vs. 22%
in 9M). Overall FY11 registered a revenue/PAT growth of 52%/55%
Y/Y primarily on account of successful opening of Palladium (0.3msf).
• Key operational highlights -
o High Street Phoenix: Steady it goes – Occupancy at HSP
remained steady, with a few more stores becoming operational
during 4Q. Revenue share contribution increased further in 4Q
(~10% of revenue) on improving retailer sales trends. More
importantly, the company indicated that the negotiations for
upcoming anchor renewals (0.2msf) are progressing well and
should push up the average rentals over the next 2-3Qs (+8-10%).
o Market city projects further delayed by 2-3 months – Fit-out
work on the Pune market city project is in full swing and it is set to
be launched in June-11 (compared to Apr-11 indicated earlier).
Work on other market city projects and Shangri-La is progressing
well; they are expected to be operational in 2Q-3QFY12. All the
market city projects are substantially pre-leased (>60%).
o Others – (a) PHNX increased stake in Bangalore east market city
by 5.1% over 4Q to 37.8%; (b) EWDPL - Treasure Bazaar (0.3msf)
at Ujjain became operational in Apr-11 with 80% occupancy.
Reiterate OW: HSP accounts for ~70% of current market cap thereby
providing high valuation comfort. The market does not seem to be
adequately pricing in the market city projects even while significant preleases
are in place and construction is in advanced stages. Launch of first
market city project in Pune in Jun-11 should improve confidence and be
the key share price catalyst, in our view. Other potential catalysts in FY12
include: (a) the opening of Shangri-La; (b) lease renewals at HSP; and (d)
improvement in leasing/rentals given positive retail fundamentals.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Phoenix Mills
Overweight
PHOE.BO, PHNX IN
4Q FY11 results: Earnings beat driven by higher other
income; operational performance remains stable
• 4Q FY11 results: Phoenix reported 4Q FY11 net income of Rs272MM
(+14% Q/Q, 73% Y/Y) ahead of our estimate of Rs242MM primarily on
account of higher other income (Rs141MM in 4Q vs. Rs71MM in 3Q).
While revenues at Rs468MM were up +4% Q/Q on higher revenue share
from HSP, the impact on EBITDA was offset by higher other
expenditure (+27% Q/Q). 4Q EBITDA margins stood at 69% vs. 72%
for 9M FY11. The tax rate too rose during the quarter to 30% (vs. 22%
in 9M). Overall FY11 registered a revenue/PAT growth of 52%/55%
Y/Y primarily on account of successful opening of Palladium (0.3msf).
• Key operational highlights -
o High Street Phoenix: Steady it goes – Occupancy at HSP
remained steady, with a few more stores becoming operational
during 4Q. Revenue share contribution increased further in 4Q
(~10% of revenue) on improving retailer sales trends. More
importantly, the company indicated that the negotiations for
upcoming anchor renewals (0.2msf) are progressing well and
should push up the average rentals over the next 2-3Qs (+8-10%).
o Market city projects further delayed by 2-3 months – Fit-out
work on the Pune market city project is in full swing and it is set to
be launched in June-11 (compared to Apr-11 indicated earlier).
Work on other market city projects and Shangri-La is progressing
well; they are expected to be operational in 2Q-3QFY12. All the
market city projects are substantially pre-leased (>60%).
o Others – (a) PHNX increased stake in Bangalore east market city
by 5.1% over 4Q to 37.8%; (b) EWDPL - Treasure Bazaar (0.3msf)
at Ujjain became operational in Apr-11 with 80% occupancy.
Reiterate OW: HSP accounts for ~70% of current market cap thereby
providing high valuation comfort. The market does not seem to be
adequately pricing in the market city projects even while significant preleases
are in place and construction is in advanced stages. Launch of first
market city project in Pune in Jun-11 should improve confidence and be
the key share price catalyst, in our view. Other potential catalysts in FY12
include: (a) the opening of Shangri-La; (b) lease renewals at HSP; and (d)
improvement in leasing/rentals given positive retail fundamentals.
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