TISCO Securities maintains a 'buy' recommendation on Central Pattana Public Company Limited, or CPN, with a target price of 83 baht, assessing that core business momentum remains strong despite some seasonal impact on second-quarter 2026 results. CPN reported net profit of 4.75 billion baht for the second quarter of 2026, up 10.3 percent year-on-year but down 4.4 percent quarter-on-quarter, in line with TISCO and Bloomberg Consensus estimates. Rental income hit a new record high for the fourth consecutive quarter, serving as the main driver of year-on-year growth. Rental revenue rose 8 percent to 11.53 billion baht, supported by income recognition from new shopping centers—Central Khon Kaen Campus, Central Park, and Central Krabi—as well as growth at existing branches and the completion of mall renovation projects. The gross margin of the retail leasing business increased to 60.8 percent from 59.2 percent a year earlier, though it declined from 61.7 percent in the previous quarter due to higher electricity costs during summer and seasonal factors in the shopping center business. Selling and administrative expenses rose 8 percent, pushing the SG&A-to-sales ratio to 32.2 percent from 28.2 percent. However, share of profit from associates jumped 46 percent to 741 million baht, boosted by the asset sale of the Rama 2 project into CPNREIT in August 2025. Excluding after-tax interest income of 99 million baht from the Central Rama 2 lease agreement, core profit grew 19 percent year-on-year. Occupancy rates across 45 shopping centers and 16 community malls remained high at 91 percent on total leasable area of 2.4 million square meters, even with the opening of Central Khon Kaen Campus in May 2026. Margin expansion was supported by revenue from new malls, higher occupancy at Central Pinklao and Central Chaengwattana after renovations, and efficiency measures such as solar rooftop installations. The hotel business posted a 5 percent revenue increase to 464 million baht, driven by the opening of three new GO! Hotels, although the occupancy rate dipped to 74 percent from 75 percent. The residential business saw revenue rise 29 percent to 640 million baht, thanks to transfers of low-rise projects which accounted for 59 percent of total transfers, while condominium transfers declined due to a reduced backlog at ESCENT Nakhon Sawan and ESCENT Nakhon Pathom. TISCO notes that Central Northville opened on July 3, 2026, with approximately 40,000 square meters of leasable area, and the luxury zone expansion at Central Phuket is scheduled for the fourth quarter of 2026, along with The Central project in the first quarter of 2027, which will support continued growth in the second half of 2026 and the following year. The research team views the sustained record-high rental income, elevated occupancy rates, and expanding retail margins as reflecting structural growth from new leasable space and tenant quality upgrades. Key risks, however, remain from slowing consumer purchasing power, volatile energy costs, and economic conditions that could affect shopping center spending.
Central Pattana Public Company LimitedQ2 net profit up 10.3% YoY, rental income record high, and TISCO maintains buy with 83 baht target.
