Sunday, October 27, 2013

Frasers Centrepoint Trust: Repeating its success (OCBC)

Frasers Centrepoint Trust:
Fair value S$2.02
add: 12m dividend forecast S$0.113
versus: Current price S$1.85

Repeating its success
• 4QFY13 DPU up 10.0% YoY
• Positive reversion of 10.8% achieved
• Bigger malls likely to underpin growth

Frasers Centrepoint Trust’s (FCT) FY13 DPU came in at 10.93 S cents (+9.2%), spot on with our DPU projection. We note that overall performance has remained robust, with portfolio occupancy maintained at a high 98.4%, while positive rental reversion of 10.8% was achieved.
We also understand ~2% of retail space at YewTee Point is expected to start operations in Oct, which is likely to improve the mall’s occupancy. For Bedok Point, management also updated that it has successfully secured an electronics retailer as its anchor tenant for basement one. This may translate to a more stable performance at the mall. Looking forward, FCT reiterated CWP and Northpoint will continue to perform, as leases at the malls amounting to 75.5% of FCT’s gross rent are due for renewal and positive reversions are still expected. FCT also revealed that the strata title division of One@Changi City is progressing well, and that the asset injection may take place in 2014. We are rolling our valuation to FY14, while keeping our forecasts largely intact. Our fair value is in turn raised to S$2.02 from S$1.96 previously. As upside now looks compelling, we upgrade FCT from Hold to BUY.

Consistent set of 4QFY13 results
Frasers Centrepoint Trust’s (FCT) 4QFY13 NPI fell 5.0% YoY to S$27.3m on higher property expenses. However, distributable income was up 2.7% to S$21.7m as FCT benefited from lower borrowing costs and higher distribution from Hektar REIT. In addition, S$2.9m of cash (0.35 S cents/unit) retained in 1HFY13 was distributed during the quarter. Consequently, DPU jumped 10.0% to 2.98 S cents. For FY13, NPI grew 6.9% to S$111.6m, whereas distributable income rose 9.5% to S$90.1m. Full-year DPU came in at 10.93 S cents (+9.2%), spot on with our DPU projection (consensus: 11.0 S cents). This, we note, marked FCT’s seventh year of consecutive DPU growth since its listing.

Leasing demand remained robust
Expectedly, Causeway Point (CWP) remained the main revenue generator, raking up 7.4% growth amid improved occupancy and rental rates. During the quarter, however, the mall was subject to higher property taxes (significant portion backdated from 2010 to 2012) and maintenance costs (higher amount budgeted ahead for the year). This brought CWP’s NPI down by 6.7%. Nevertheless, we note that overall performance remained robust, with portfolio occupancy maintained at a high 98.4%, while positive rental reversion of 10.8% was achieved. We also understand ~2% of retail space at YewTee Point is expected to start operations in Oct, which is likely to improve the mall’s occupancy. For Bedok Point, management also updated that it has successfully secured an electronics retailer as its anchor tenant for basement one. This may translate to a more stable performance at the mall.

Upgrade to BUY
Looking forward, FCT reiterated CWP and Northpoint will continue to perform, as leases at the malls amounting to 75.5% of FCT’s gross rent are due for renewal and positive reversions are still expected. FCT also revealed that the strata title division of One@Changi City is progressing well, and that the asset injection may take place in 2014. We are rolling our valuation to FY14, while keeping our forecasts largely intact. Our fair value is in turn raised to S$2.02 from S$1.96 previously. As upside now looks compelling, we upgrade FCT from Hold to BUY.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 23/10/13

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