*Official* MasterLeong Thread

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MasterLeong

MasterLeong

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CIMB on FCT

Frasers Centrepoint Trust
Growing to new heights
■ FCT is one of our top picks. We like its sub-urban resilience and acquisition upside.
■ Expect deceleration in earnings momentum to trough in FY17 as Northpoint’s AEI is
scheduled to be completed in Sep 17.
■ Low gearing provides deep capacity to explore inorganic growth prospects.
Maintain Add with lower target price
● FCT has de-rated from a high of 1.14x P/BV in Sep to the current 1x P/BV, 1 s.d.
below historical mean. On the back of the recent acquisition of the retail podium of
Yishun 10 Cinema Complex for S$37.8m, we trim our FY17-19F DPU by 1%.
● Due to across-the-board hike in Singapore Rf from 2.2% to 2.8%, we lower our DDMtarget
price and maintain Add on the stock. FCT is one of our top picks within the
sector. Its sub-urban resilience offers investors a 6% FY17 dividend yield, in line with
historical mean. We think the stock could re-rate when the peak of Northpoint’s AEI
passes through in 2HFY17, and occupancies and earnings recover.
● Further catalysts could also come from acquisitions. Downside risk could come from
a delay in the completion of the Northpoint AEI.
Positive rental reversion offset by lower occupancies
● Although FCT experienced positive rental reversion of 4.6% in 4QFY16 and 9.9% in
FY16, lower occupancy of 89.4% affected performance. Northpoint is currently
undergoing AEI and saw take-up sliding to 70.9%.
● Meanwhile, Changi City Point’s occupancy fell to 81.1% due to transitional vacancy
from the changeover of an anchor tenant as well as tenant remixing.
● This was partially offset by better performance at Causeway Point and other malls.
Bedok Point continues to see lower yoy performance.
AEI for Northpoint to peak in 2QFY17
● We anticipate rental reversions to stay positive, although at a more moderated pace
of 0-3% as slowing retail sales would cap landlords’ ability to raise rents.
● FCT has 39.2%/30.9%/23.8% to be renewed in FY17-19F. A sizeable portion of
FY17F expiries are in Causeway Point. Given its niche location, we think the mall
would be able to increase its rents.
● Also, we think the vacancies at Northpoint are expected to peak in 2HFY17.
Northpoint’s AEI is scheduled to end in Sep 17 and we understand there is good
leasing interest post-AEI.
Low gearing provides headroom for inorganic expansion
● The balance sheet is healthy with gearing at 28.3%. This puts the trust in a strong
position to explore inorganic growth, both overseas and locally. Its sponsor has two
assets that could be injected when stabilised. FCT’s borrowing cost remains low at
2.1% with 59% of interest cost hedged. The trust has S$218m or 30% of its loans
due to be refinanced in FY17.
 
MasterLeong

MasterLeong

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FCL looks cheap at 1.525 considering 6 cents dividends coming in... maybe I will hoot more

FCT also looks cheap... so many bargains hahahahaa
 
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MasterLeong said:
FCL looks cheap at 1.525 considering 6 cents dividends coming in... maybe I will hoot more

FCT also looks cheap... so many bargains hahahahaa
Click to expand...

FCL got more upside capital gain imho. Normally I would resist buying stocks with CD symbol. But this is really too good a bargain. :D
 
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