CRCT’s 1Q09 distributable income grew by 46% to S$3.3 m (DPU of 2.12 Scts), in line with expectations. On a sequential basis, portfolio occupancy declined 1% to 97%, on the back of continued tenant remixing and the loss of a major tenant at Qibao & Xizhimen. Maintain HOLD, TP $0.90 based on DCF. CRCT currently offers a FY09-10 DPU yield of 8.6-9.6%.

Results in line. CRCT’s 1Q09 results are within expectations. Gross revenues and NPI increased by 32.7% and 33.5% respectively to S$30.4m and S$19.1m respectively. This growth was brought about by a full quarter contribution from Xizhimen Mall acquired in 1Q08. Distributable income grew by c. 51% to 13.3m, translating to a DPU of 2.14 Scts.

Weaker sequential performance. Results as compared to 4Q08 revealed a mixed operational performance, brought about by a 1% decrease in portfolio occupancy to c96.7%. This was due a major tenant that gave up its lease in 2 of its malls (Qibao & Xizhimen) owing to poor business performance. We understand that the asset managers are actively looking to lease out these spaces. Rental reversions also moderated to an average 1.8% in 1Q09, but noted that Wangjing and Xizhimen mall recorded small declines in signing rents. This is in line with our projections of a flattish renewal cycle in FY09 coupled with an increase in vacancy of 5-10% at its malls.

Appreciating RMB beneficial for CRCT. We adjust our earnings estimates in line with our currency strategist outlook on the S$-RMB exchange, leading to a higher estimate of 7.9cts and 8.9 cts respectively.

Maintain HOLD, TP $0.90. We maintain our HOLD call on CRCT, TP raised to $0.90 based on DCF, after (i) adjusting our earnings upwards due to the positive impact from an appreciating RMB against the S$ and (ii) raising our terminal growth assumption.