Perennial China Retail Trust urgently needs 'short-term gains'

It has to monetise completed assets.

According to CIMB, 4Q/FY12 was in line with consensus and expectations at 25%/100% of full-year estimates, supported by earn-out structures.

Underlying core earnings from JVs were up a marginal 1.5% qoq in 4Q12, bringing FY12 to S$5.4m, below expectations. Core net profit was also hit by higher-than-expected pre-operating costs for Foshan and Chengdu Qingyang malls.

Here's more from CIMB:

We expect the weak earnings to persist but project the trust to turn profitable in FY13, boosted by revenues from Foshan mall (to commence with target 90% occupancy) and Shenyang office.

On the leasing front, pre-commitments stand at 16% for Shenyang office, 60% for Foshan mall and 33% for Chengdu Qingyang mall, with more progress to come in the next few months.

Management has reiterated its confidence in the long-term value of its properties but articulated the need for short-term gains to grow the business, through monetising completed assets (recycling capital) and strata sale of non-block retail and office components.

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