CPN to High-end Shopping District in Siam Square

Central Pattana PCL (CPN) won the bid for Block A (Scala) at Siam Square on leasehold for 30 years from Property Management of Chulalongkorn University (PMCU).

The leasehold covers 7 rai 312 sq.wah of land which also includes Scala theater along with 79 units of 3-4 storey commercial buildings spreading over an area of 9,556 sqm. The project is expected to be handed over to CPN by early 2022 with CPN management to renovate and launch commercial operations of the project by early 2023.

Although one of the conditions to the bid is to maintain the current structure of the area to the maximum limit, however CPN has laid out plans to develop a small shopping mall similar to community mall. The winning of the bid opened a lucrative stream of revenue for CPN given the leasehold area is located in the heart of the one of the busiest high-end shopping district in the country where daily foot traffic is multifold.  

Based on discussion of the management with Kasikorn Securities (KS), the management did not sate actual investment/development budget for the project but mentioned on the board’s approval of an investment budget of 7.75 billion baht which includes the Siam Square project together with potential investment in SF and the British Embassy project. Based on this scenario KS’s estimates internal rate of return (IRR) of 10.0-13.5% with assumption of discount rate at 7.0%.

The broker maintains outperform on the stock with target price of THB 58.50, an upside potential of 8.55%. The stock is currently trading at THB 53.5.