Frasers Centrepoint Trust : Growing with confidence (DBSV)

Frasers Centrepoint Trust
BUY S$1.76
STI : 3,167.43
Price Target : 12-Month S$ 2.14
Growing with confidence

• Acquisition of Changi City Point a positive catalyst
• Stable portfolio earnings
• Attractive yields; BUY, TP S$2.14

Acquisition of Changi City Point to propel earnings further. Changi City Point (CCP) is the largest dedicated retail outlet in Changi Business Park with 200k sf of NLA.
We like this asset for (a) its exposure to the growing Changi Business Park hub, (b) its accessibility due to its close proximity to Expo MRT station, and (c) its close proximity to the Expo halls which attract visitors to the Expo conventions over the weekends. At present, the trade mix by NLA comprises 40% for F&B, 50% for retail and 10% for services and entertainment. As the mall is still in its first lease cycle, we believe there is substantial value to be unlocked from rental renewals and trade mix optimisation.

Portfolio earnings to remain stable. In FY14, FCT will renew 32% of its income, out of which 75% will come from Causeway Point and Northpoint. We expect positive rental reversions from these two malls, given strong shopper traffic and tenant sales. However, we expect more moderate reversion rates compared to previous years, as a significant amount of upside from the AEI works has already been captured. Bedok Point is likely to face increasing difficulty in its operations, with competition from the larger Bedok Mall nearby, which recently opened. Impact of Bedok Point on portfolio earnings, however should be minimal given its small operational footprint.

BUY, TP S$2.14. We like FCT for its strong income visibility, growth potential and attractive yields of 6.5%- 6.9%. BUY, TP S$2.14 based in DCF.

Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 02/01/14