Tuesday, October 29, 2013

Frasers Commercial Trust: Laudable set of results (OCBC)

Frasers Commercial Trust:
Fair value S$1.45
add: 12m dividend forecast S$0.090
versus: Current price S$1.28

Laudable set of results
• 4QFY13 DPU up 18.9% YoY
• Portfolio maintaining its resilience
• Robust growth essentially locked in

Frasers Commercial Trust (FCOT) reported 4QFY13 DPU of 2.08 S cents, up 18.9% YoY. This brings the full-year DPU to 7.83 S cents (+17.0%), largely in line with both consensus and our DPU forecasts of 7.9 S cents.
The direct management and rejuvenation works at China Square Central has proven to be a great success, as it saw a robust YoY growth in NPI of 26.8% amid higher rental and occupancy rates. Portfolio occupancy has also remained healthy at 97.9%, with positive rental reversions ranging from 4.4% to 23.2% also recorded. Looking ahead, we maintain our view that FCOT will continue to perform as its transformation initiatives over the past year are likely to underpin growth. Maintain BUY with unchanged fair value of S$1.45 on FCOT.

No surprises in 4QFY13
Frasers Commercial Trust (FCOT) released its 4QFY13 results last evening. NPI fell by 17.4% YoY to S$21.9m due mainly to continued weakness in AUD and divestments of KeyPoint and Japan properties. However, the decline in NPI was more than offset by realized gains from currency hedges, lower interest costs and savings in the Series A convertible perpetual preferred unit (CPPU) distribution following the net conversion/redemption of the CPPUs. As a result, distributable income to unitholders jumped 20.9% to S$13.7m. DPU for the quarter came in at 2.08 S cents, up 18.9% YoY. This brings the full-year DPU to 7.83 S cents (+17.0%), largely in line with both consensus and our DPU forecasts of 7.9 S cents.

Robust underlying performance
The direct management and rejuvenation works at China Square Central (CSC) has proven to be a great success, as it saw a robust YoY growth in NPI of 26.8% amid higher rental and occupancy rates. 55 Market Street also delivered 10.8% growth in NPI over the quarter. This helped to cushion the lower translated income from the Australia properties. We note that portfolio occupancy has remained healthy at 97.9%, compared to 98.1% a quarter ago. Positive rental reversions ranging from 4.4% to 23.2% were also recorded for the leases commenced in 4Q, demonstrating the resilience and quality of FCOT’s assets.

Maintain BUY
Looking ahead, we maintain our view that FCOT will continue to perform as its transformation initiatives over the past year are likely to underpin growth. We also understand that the Telok Ayer MRT station, which is just at the doorstep of CSC, is expected to open in Dec 2013. Coupled with the completion of enhancement initiatives around CSC, this is likely to boost its competitive position and growth potential. In addition, management noted that FCOT is receiving a net rent of S$1.80 psf pm at Alexandra Technopark, significantly lower than the underlying passing gross rent of S$3.50. As such, income uplift is expected upon the expiry of the master lease in Aug 2014. We maintain BUY with unchanged fair value of S$1.45 on FCOT.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 24/10/13

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