Central Pattana: Key takeaways from Central Phuket site visit
- Central Phuket, largest and most successful shopping mall in Phuket, is ranked among the top five revenue generators within CPN’s mall portfolio
- With 65% of revenue from international tourists, the mall benefits from strong tourism; tenant sales have hit 130% of pre-pandemic levels
- Launching two residential condo projects (+1 in the future) nearby to leverage on the success of its mall
- Re-iterate BUY with a DCF-based TP of THB80
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Highly dependent on tourism industry. Phuket's economy is heavily reliant on tourism, which accounts for approximately 93% of its revenue. In 2023, tourism generated over THB388bn for the island, making it the top tourism revenue earner in Southern Thailand and second in the country after Bangkok. Projections indicate that Phuket's tourism revenue will likely exceed THB400bn in 2024.
International tourists made up 77% of total tourists in Phuket and 95% of tourism revenue. In the first 7M24, Phuket welcomed 7.6mn tourists (+18% y/y). Of the total, 5.9mn or 77% of the total were foreign tourists (+25%) and 1.7mn were Thai tourists (-0.1%). In terms of tourism revenue, total tourism revenue from all tourists amounted to THB284.8bn (+31%) in 7M24. Revenue from foreign tourists was THB271.5bn (+33%) or 95% of the total tourism revenue, while that from Thai tourists was THB13.3bn (+3%).
Tourist arrivals to Phuket back to 96% of pre-pandemic level in 8M24. The top five sources of tourist arrivals are China (54% recovery rate vs 2019), Russia (152% recovery), India (126%), Australia (105%), and United Kingdom (127%). It is estimated that total tourist arrivals could go back to the pre-pandemic level of 13mn by end of this year.
About Central Phuket
The luxury lifestyle landmark of Phuket. Central Phuket is the premier luxury lifestyle destination on the island and the largest, most successful shopping mall in Phuket. As part of CPN’s portfolio of 40 shopping malls, it ranks among the top five revenue generators. Strategically located just 10 minutes from Phuket Old Town and 30 minutes from popular tourist attractions and beaches, Central Phuket is also only 32 kilometers from Phuket International Airport. The mall serves a catchment area for 1.2 million residents from Phuket and neighbouring provinces such as Phang Nga and Krabi, while also catering to international tourists visiting the island.
Central Phuket houses two modern buildings—Central Phuket Festival and Central Phuket Floresta—connected by moving walkways. Situated on 111 rai of leasehold land, the lease expires in 2056, with 32 years remaining. Average daily foot traffic is now c 80,000 people per day.
Central Phuket Festival – more lifestyle brands. Opened in 2015, Central Phuket Festival emphasizes lifestyle brands. It has a gross floor area (GFA) of 158,847 sqm and a gross leasable area (GLA) of 49,502 sqm. This mall features affordable brands, mirroring the concept of other CPN malls. As of Q2 2024, the average occupancy rate was 95%, with average rent ranging from THB 1,718 to 1,890 per sqm per month. Rental income is evenly divided, with 50% coming from tenant turnover and the other 50% from fixed rents.
Key tenants include Zara, H&M, Uniqlo, Jaspal, Steve Madden, Under Armour, Aldo, Skechers, The North Face, Timberland, Tissot, Playboy, Pomelo, Pandora, New Balance, Gentle Woman, Giordano, Garmin, Hush Puppies, Havaianas, CPS Chaps, Crocs, Converse, De Preco, Charles & Keith, Fila, Champion, Anello, Asics, Aurora, Bata, Better Vision, AIIZ, After You, AKA, Boost, Bon Chon, Bar-B-Q Plaza, Fuji, Chatramue, Haidilao, Office Mate, Mr. D.I.Y., and Jetts 24-hour Fitness.
Central Phuket Floresta – Targeting more luxury brands. Opened in 2018, Central Phuket Floresta focuses on luxury brands. It has a GFA of 181,220 sqm and a GLA of 33,407 sqm, positioning itself as a super luxury mall akin to Central World and Central Embassy. In Q2 2024, the average occupancy rate was 88%, with average rents between THB 1,890 and 2,062 per sqm per month. Here, approximately 80% of rental income is based on tenant turnover, while 20% is fixed.
Key tenants include Prada, Christian Dior, Louis Vuitton, Hermes, Gucci, Burberry, Balenciaga, PMT The Hour Glass, Bottega Veneta, Rolex, Saint Laurent, Tiffany & Co., Versace, Zegna, Chow Tai Fook, Nike, Adidas, Carolina Lemke, Cashmere House, Calvin Klein, Ducati, and Dickies. CPN is experiencing strong demand from other luxury brands interested in establishing stores at Central Phuket Floresta. Renovations and space optimisation are currently underway to accommodate this demand, which is expected to enhance the mall's occupancy and revenue.
Occupancy rate is on the rise. The following chart shows occupancy rate has been above 90% for Central Phuket Festival which makes up 60% of total NLA, and above 85% for Central Phuket Floresta, which contributes 40% of NLA.
The biggest aquarium in Thailand. One of the key attractions at Central Phuket is Aquaria Phuket, the largest aquarium in Thailand, located beneath Central Phuket Floresta. This remarkable facility offers a unique underwater experience and features Suvana, Thailand’s only underwater restaurant and lounge, where guests can dine surrounded by marine life.
Trick eye museum. Another highlight is the Trick Eye Museum, a world-renowned 3D optical illusion art museum. It is the first augmented reality (AR) museum to integrate AR technology with its exhibits, creating vibrant and engaging photo opportunities. Visitors can encounter a fire-breathing sea dragon while standing on a log bridge, swim with whale sharks in a large tank, or even sit with polar bears on ice cliffs.
Residential condominium in Phuket
Visiting CPN’s two residential condo projects near Central Phuket. Building on the success of its Central Phuket malls, CPN has acquired land to develop three residential condominium projects in the vicinity.
The first project, Phyll Phuket, was launched in 2022 and is located just 350 meters from Central Phuket. It is completely sold out, with the final units set to be transferred to buyers this year. This project consists of 439 residential units, with average sizes of 26 sqm, 28 sqm, and 32 sqm. The average selling price started at THB 90,000 per sqm, or approximately THB 3.1 million per unit, leading to a total project value of around THB 1.5 billion. A significant majority of buyers (78%) are Thais, while 22% are foreign, including Russian, Chinese, and European nationals. About 60% of buyers purchased the units for personal use, while 40% for investment, with estimated rental yields as high as 8%. Resale prices have appreciated by about 10%, reaching approximately THB 100,000 per sqm currently.
The second project, Escent Phuket, follows the success of Phyll. Located 300 meters from Central Phuket Floresta and 800 meters from Central Phuket Festival, Escent is positioned as a more affordable option. It will feature three eight-storey buildings with a total of 513 units, offering fully furnished rooms in sizes of 25 sqm, 28 sqm, and 51 sqm (two bedrooms). The selling price starts at THB 91,000 per sqm, with a projected project value of around THB 1.6 billion and an estimated gross margin of approximately 32%. Construction is set to begin in 2025, with completion between late 2026 and early 2027.
CPN has another land plot adjacent to Escent Phuket. The company plans to launch a higher quality condominium brand on the plot in the future.
The site visit reaffirms our positive view on CPN. Our site visit to Central Phuket, one of CPN's 40 malls, has reinforced our positive outlook on CPN. The mall’s impressive design and strategic location highlight CPN's commitment to creating a premier shopping experience.
We are particularly impressed by the diverse range of attractions, including Aquaria Phuket, the largest aquarium in Thailand, and the Trick Eye Museum, which features innovative AR technology. These attractions not only draw visitors but also enhance the overall appeal of the mall.
The strong occupancy rates and a vibrant mix of tenants reflect a thriving retail environment. Overall, our visit confirmed that Central Phuket exemplifies CPN's ability to attract both shoppers and high-quality brands, solidifying our confidence in CPN’s growth potential and market leadership.
On its residential business. While many residential property developers are struggling with weak demand, CPN’s condominium sales have been strong. This success can be attributed to CPN’s strategy of leveraging the popularity of its malls by launching residential projects nearby. This mixed-use development concept is expected to drive continued success in the future.
Maintain BUY with a DCF-based TP of THB80. CPN remains one of our top picks in the Thai market. We like the company for its strong cashflow generating capacity from its successful shopping malls across the country, its competent management team, and strong balance sheet. We expect CPN’s earnings to continue to hit new highs in 2024 and 2025. Our THB80 TP is based on a DCF valuation, and offers decent upside from the current share price.
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