CPN reported a 2Q09 net profit increase of 13% yoy to Bt587mn. When excluding non-recurring gains of Bt46mn from the acquisition of additional investment units in The Thai Business Fund 4, the normalised earnings were Bt541mn, up 4% yoy. The gross margin declined from 44.7% in 2Q08 to 39.4% based on greater depreciation from the newly added projects coupled with higher lease payments on the sub-lease agreement for Central Ladprao. Advertising expenses and interest payments have also gone up significantly.
However, CPN has experienced 29% growth in revenue with rental income surging 26% to Bt2,535mn. This is attributed to additional income from four new projects, Chaengwattana (opened in November 2008), Pattaya Beach (January 2009), Udonthani (April 2009) and Chonburi (May 2009) with a total lease area of 210,490 sqm or a 37% increase. The average occupancy rate for the 14 shopping centers rose from 95% in 2Q08 to 96% as a result of favourable occupancy at the newly opened projects. Occupancy at Central World, the largest CPN project, went up from 91% to 97%. Nevertheless, the average rental rate saw a marginal contraction by 1.8% yoy to Bt1,251/sqm/month due to the relatively lower rental rates of the upcountry projects and rental rate discounts at newly launched projects. Office building occupancy declined from 95% to 85% given that Chaengwattana still has a low occupied rate as in just opened in late 1Q09.