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Phoenix Mills
Overweight
PHOE.BO, PHNX IN
Pune market city finally opens its doors
We visited Phoenix Mills’ (PML) Pune market city project (commenced
operations yesterday), first of the four market cities of Phoenix, which are
likely to be opened over the next 2-3Qs across Mumbai/ Bangalore/
Chennai. Our initial view from the site visit is positive. Retailer sentiment
seems to be fairly healthy despite oversupply concerns in the area (3 malls
recently opened in the vicinity). Phoenix has done better than competition,
achieving average rent of Rs 60psf about 20-25% higher than competition.
Overall financial numbers seem to be on track to achieve an annuity rent
of Rs3B by FY13E (45% CAGR in FY11-13E) given healthy pre leasing
across upcoming projects. While delay in opening of market cities has
been a concern, launch/response to the Pune project and later in the year
Kurla / Shangri-la hotel should help improve confidence, in our view.
Pune market city now open: Phoenix Mills launched its first market
city– 1.2msf of retail space (PHNX stake – 0.7msf) in Pune last evening.
Overall the project currently has ~80% lease commitments with anchor
tenants being Marks & Spencer, Westside, Star Bazaar, Zara, Pantaloon
and PVR. The mall has partially commenced operations as a number of
stores are still in the fit out stage and is likely to be fully operational
over the next 2-3 months. It is expected to generate rentals of ~Rs500M
(PHNX stake) once fully operational. PAT contribution, however, is
likely to be muted in the near term given corresponding
finance/depreciation expense.
Retail supply in the vicinity remains high with 3 malls (>2msf) being
opened in YTD CY11. These include Raheja’s Inorbit mall (0.65msf),
PML’s market city (1.2msf) and Pulse (~0.5msf). While anchor tenants
vary across malls, interestingly a number of vanilla stores have taken
space in all three malls. There are additional 3 malls in the neighboring
suburb (15 mins away at Mudhwa Road), which are nearing completion.
Maintain OW with revised Mar-12 PT of Rs260 (vs. 280 earlier) as
we factor in a push-back in residential launches and startup losses in mall
/hotel openings. At CMP, PML’s flagship HSP asset accounts for 70% of
market cap thereby providing high valuation comfort
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Phoenix Mills
Overweight
PHOE.BO, PHNX IN
Pune market city finally opens its doors
We visited Phoenix Mills’ (PML) Pune market city project (commenced
operations yesterday), first of the four market cities of Phoenix, which are
likely to be opened over the next 2-3Qs across Mumbai/ Bangalore/
Chennai. Our initial view from the site visit is positive. Retailer sentiment
seems to be fairly healthy despite oversupply concerns in the area (3 malls
recently opened in the vicinity). Phoenix has done better than competition,
achieving average rent of Rs 60psf about 20-25% higher than competition.
Overall financial numbers seem to be on track to achieve an annuity rent
of Rs3B by FY13E (45% CAGR in FY11-13E) given healthy pre leasing
across upcoming projects. While delay in opening of market cities has
been a concern, launch/response to the Pune project and later in the year
Kurla / Shangri-la hotel should help improve confidence, in our view.
Pune market city now open: Phoenix Mills launched its first market
city– 1.2msf of retail space (PHNX stake – 0.7msf) in Pune last evening.
Overall the project currently has ~80% lease commitments with anchor
tenants being Marks & Spencer, Westside, Star Bazaar, Zara, Pantaloon
and PVR. The mall has partially commenced operations as a number of
stores are still in the fit out stage and is likely to be fully operational
over the next 2-3 months. It is expected to generate rentals of ~Rs500M
(PHNX stake) once fully operational. PAT contribution, however, is
likely to be muted in the near term given corresponding
finance/depreciation expense.
Retail supply in the vicinity remains high with 3 malls (>2msf) being
opened in YTD CY11. These include Raheja’s Inorbit mall (0.65msf),
PML’s market city (1.2msf) and Pulse (~0.5msf). While anchor tenants
vary across malls, interestingly a number of vanilla stores have taken
space in all three malls. There are additional 3 malls in the neighboring
suburb (15 mins away at Mudhwa Road), which are nearing completion.
Maintain OW with revised Mar-12 PT of Rs260 (vs. 280 earlier) as
we factor in a push-back in residential launches and startup losses in mall
/hotel openings. At CMP, PML’s flagship HSP asset accounts for 70% of
market cap thereby providing high valuation comfort
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