High Suburban Resilience
- FCT announced stable 3QFY15 (Sep) results as the portfolio booked in a 5.3% positive rental reversion for the quarter.
- Maintain BUY with a DDM-derived TP of SGD2.22 (13.5% total return upside).
- We like the counter’s high resilience, especially in this volatile market.
- The REIT is trading at a compelling FY16 dividend yield of 5.7%, which is one of the highest among its peers.
Another stable quarter.
- Frasers Centrepoint Trust (FCT) announced a stable 3Q/9MFY15 DPU with 0.5%/4.1% YoY growth to 3.04/8.75 cents (SGD), meeting 73% of our full-year estimates.
- Revenue was substantially higher YoY, mainly driven by the new addition of Changi City Point (CCP) and higher revenue from all the malls, with the exception of Bedok Point.
- In addition, the REIT achieved a healthy rental reversion at 5.3%.
Strengthening its moat in North Singapore.
- We like the fact that the REIT owns the largest market share of malls in the northern region.
- Currently, its sponsor pipeline includes assets such as Northpoint 2 and Waterway Point (located within the northern/north-eastern region respectively), which should further strengthen its market share in North Singapore.
- We think that its moat in the northern region would provide the REIT with higher pricing power over its tenants.
Limited impact from Bedok Point’s underperformance.
- There might be some concerns over Bedok Point’s lower-than-expected performance as we see a downtrend in the mall’s revenue.
- However, we would like to highlight that Bedok Point contributes a mere 3.6% of the portfolio net property income (NPI), and hence does not greatly impact the overall portfolio performance.
- Meanwhile, we understand that management has ongoing plans to reposition the mall to better cater to the surrounding residences in Bedok.
Maintain BUY with a TP of SGD2.22.
- We continue to like FCT as we find its resilience unbeatable in non-discretionary spending, along with potential organic growth.
- We maintain our BUY recommendation with our TP unchanged at SGD2.22.
(Ivan Looi; Ong Kian Lin)
Source: http://www.rhbgroup.com/
