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Phoenix Mills Overweight
PHOE.BO, PHNX IN
1QFY12- Operational performance remains healthy.
Stake increased further in Bangalore market city
Phoenix Mills (PML) reported 1Q earnings ahead of our expectations, aided
by higher other income. Operational performance remains satisfactory with
HSP registering steady occupancy/rentals and progress on the opening of
market cities is now largely on track (Pune already opened). Importantly, it
further increased its stake by 8.6% in Bangalore market city in 1Q. Its overall
stake has risen from 32.7% to 46.4% over the last 2Qs. The incremental stake
increase was done at 1x P/B, lower than our and street valuations (JPMe-
1.5xP/B), which is a positive and gives PML greater control over the asset.
1QFY12 results above expectations: 1) 1Q standalone PAT at Rs272M
(flat Q/Q, +49% Y/Y), 5% above our expectation, aided by higher other
income (Rs110M); 2) EBITDA margin was at 70%, lower by 200bps Y/Y,
vs. management guidance of 73-75% due to higher legal and advertising
expenses (+70% Y/Y,+43% Q/Q); 3) consolidated debt at Rs7.9B, rising by
Rs1.5B during the Q due to capex on Pune market city/ShangriLa.
Consolidated FY11 results: PHNX also reported consolidated FY11
results along with 1Q release. FY11 consol. revenues/PAT were up
71%/32% Y/Y primarily due to a) higher occupancy at Palladium; b) the
opening of Lucknow mall under BARE (~Rs110 rental) and c) recognition
of office sales in Pune market city (~Rs170M). Consol. PAT at Rs818M
was lower than standalone PAT (Rs916M) due to initial start-up losses in
Lucknow mall and higher interest expenses in Pune market city.
Operational performance remains healthy: 1) occupancy at PML’s
flagship High Street Phoenix (HSP) mall remains steady at over 90% with
average rentals at Rs162psf pm; 2) Pune market city (1.2msf retail space)
was the first of four market cities to open in Jun-end (>80 stores operational
currently and the remaining at fit-out stage); 3) Bangalore/Kurla market
cities are at tenant fit-out stage and expected to be opened in Sep to Dec; 4)
pre-lease activity has been healthy in 1Q, esp. in Chennai/Kurla mall with
commitments in place for 70-80% across all market city projects; 4) soft
launch of ShangriLa pushed to Dec (vs. Oct earlier); 5) response to soft
launch of Chennai residential project has been encouraging, as per the co.
PML increased its holding further in Bangalore market city by 8.6% in 1Q
to 46.4% for ~Rs170M (at 1x P/B) by buying out co-promoters’ stake. This
follows a 5% increase done in 4Q at similar valuations (for Rs100M).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Phoenix Mills Overweight
PHOE.BO, PHNX IN
1QFY12- Operational performance remains healthy.
Stake increased further in Bangalore market city
Phoenix Mills (PML) reported 1Q earnings ahead of our expectations, aided
by higher other income. Operational performance remains satisfactory with
HSP registering steady occupancy/rentals and progress on the opening of
market cities is now largely on track (Pune already opened). Importantly, it
further increased its stake by 8.6% in Bangalore market city in 1Q. Its overall
stake has risen from 32.7% to 46.4% over the last 2Qs. The incremental stake
increase was done at 1x P/B, lower than our and street valuations (JPMe-
1.5xP/B), which is a positive and gives PML greater control over the asset.
1QFY12 results above expectations: 1) 1Q standalone PAT at Rs272M
(flat Q/Q, +49% Y/Y), 5% above our expectation, aided by higher other
income (Rs110M); 2) EBITDA margin was at 70%, lower by 200bps Y/Y,
vs. management guidance of 73-75% due to higher legal and advertising
expenses (+70% Y/Y,+43% Q/Q); 3) consolidated debt at Rs7.9B, rising by
Rs1.5B during the Q due to capex on Pune market city/ShangriLa.
Consolidated FY11 results: PHNX also reported consolidated FY11
results along with 1Q release. FY11 consol. revenues/PAT were up
71%/32% Y/Y primarily due to a) higher occupancy at Palladium; b) the
opening of Lucknow mall under BARE (~Rs110 rental) and c) recognition
of office sales in Pune market city (~Rs170M). Consol. PAT at Rs818M
was lower than standalone PAT (Rs916M) due to initial start-up losses in
Lucknow mall and higher interest expenses in Pune market city.
Operational performance remains healthy: 1) occupancy at PML’s
flagship High Street Phoenix (HSP) mall remains steady at over 90% with
average rentals at Rs162psf pm; 2) Pune market city (1.2msf retail space)
was the first of four market cities to open in Jun-end (>80 stores operational
currently and the remaining at fit-out stage); 3) Bangalore/Kurla market
cities are at tenant fit-out stage and expected to be opened in Sep to Dec; 4)
pre-lease activity has been healthy in 1Q, esp. in Chennai/Kurla mall with
commitments in place for 70-80% across all market city projects; 4) soft
launch of ShangriLa pushed to Dec (vs. Oct earlier); 5) response to soft
launch of Chennai residential project has been encouraging, as per the co.
PML increased its holding further in Bangalore market city by 8.6% in 1Q
to 46.4% for ~Rs170M (at 1x P/B) by buying out co-promoters’ stake. This
follows a 5% increase done in 4Q at similar valuations (for Rs100M).
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