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Singapore Daily Bulletin – 15/02/13

PCRT Posts Robust 4Q12 Performance
China mall owner, Perennial China Retail Trust (PCRT) posted distribution to unitholders of $11.2 million for 4Q12 ended 31 December 2012, in line with its prospectus forecast. PCRT said that it will distribute $0.0196 per unit for 2H12 on 18 March 2013, bringing its full-year distribution per unit to $0.0386. For FY12, the trust recorded $84.6 million net profit, largely driven by fair value revision of properties in its portfolio amounting to $60.3 million and from an earn-out of $21.9 million. Pua Seck Guan, executive director and chief executive officer of PCRT said the trust will continue to focus on enhancing the operating performance of its three assets in Shenyang despite subsequent challenging quarters, while it prepares for the opening of Perennial Jihua Mall in Foshan and Perennial Qingyang Mall in Chengdu. He added: “With more than 90 percent of PCRT’s IPO assets having completed construction, the development risk for the IPO portfolio has been largely reduced.”

Significance: The trust negotiated an additional earn-out amount of up to Rmb342 million from July 2013 to end-2014 with its strategic partner, Shanghai Summit. This amount can be drawn down when net property income fail to meet a certain threshold to help PCRT pay a minimum dividend. With this measure in place till FY14, it is committed to deliver a target annual amount for distribution of Rmb227 million for FY13 and FY14.

China Minzhong 2Q13 Net Profit Rises 23.6%
China Minzhong Food Corporation, an integrated vegetable processor in the PRC announced net profit for 2Q13 ended 31 December 2012, was up 23.6 percent year-on-year to Rmb215.81 million or Rmb0.39 per share. The vegetable producer said yesterday that turnover rose 32.3 percent against the previous year to Rmb860.9 million, on increased sales from both its processed and cultivation segments. This was partially hit by a 68 percent year-on-year tumble in revenue from the trading of mushroom spores segment to Rmb20.4 million, due to the late winter pattern in the preceding year. 1H13 net profit came in at Rmb337.43 million or Rmb0.61 a share, up 26 percent year-on-year. Turnover rose 45.7 percent to Rmb1.47 billion from Rmb1.01 billion a year earlier. The strongest growth for 1H13 was reported by its other processed products, which saw a leap in revenue to Rmb169.1 million from Rmb47.9 million a year earlier. Overall gross profit margin for 1H13 slipped 4.2 percentage points to 33.9 percent from 38.1 percent a year ago.

Significance: The overall demand for vegetables continues to be strong, fuelled by rising urbanisation as well as preferences for health dietary eating habits. At the same time, the continued shift towards higher value products has also enabled the group to tap on the rising affluence in the PRC market.

Keppel Land Expands Footprint In China
Keppel Land’s China unit has partnered its property fund management arm – Alpha Investment Partners to acquire a retail mall in Shanghai, in line with its strategy to grow its commercial portfolio in high growth cities. Keppel Land China paid a cash consideration of US$126.5 million for a 42.5 percent stake in Equity Rainbow II which owns 80 percent of the issued shares in Sparkle Bright Holdings, which holds an indirect 100% stake in Lifehub. The property being acquired in the joint venture is Lifehub@Jinqiao, a mixed-use office and retail development in the affluent Jinqiao neighbourhood in Shanghai’s Pudong district. Underpinning Keppel’s confidence are expectations of a growing group of middle-class consumers in China and strong potential growth in retail expenditure in Shanghai. Ang Wee Gee, chief executive officer of Keppel Land said: “As one of China’s key gateway cities, we remain confident about the opportunities in the commercial property market in Shanghai.” He added: “The growing affluence and arising income among the Shanghainese will see strong demand for well-located premier retail malls.”

Significance: Lifehub@Jinqiao, which has about 1.2 million square feet of retail and office space and is 99 percent leased, is connected via major transport nodes and features a mix of local and international retailers.