Frasers Centrepoint Trust (FCT) - UOB Kay Hian 2017-07-25: 3QFY17 Results In Line

Frasers Centrepoint (FCT) - UOB Kay Hian 2017-07-25: 3QFY17 Results Of FCT (In Line) FRASERS CENTREPOINT TRUST J69U.SI

Frasers Centrepoint Trust (FCT) - 3QFY17 Results Of FCT (In Line)

  • MLT’s and FCT’s results are in line with expectations, with portfolio rental reversions of +6% and +0.4% in the quarter respectively. 
  • FCT remains cautiously optimistic on its outlook due to its suburban portfolio. 
  • For FCT, maintain BUY and target price of S$2.26. Maintain OVERWEIGHT on the sector.



WHAT’S NEW

  • Frasers Centrepoint Trust (FCT) reported quarterly results.


ACTION 


Results in line with expectations; maintain BUY and target price of S$2.26, based on DDM (required rate of return: 6.3%, terminal growth: 1.5%). 

  • FCT reported 3QFY17 DPU of 3.0 S cents, down 1.3% yoy. 
  • Gross revenue and NPI declined 3.3% yoy and 1.3% yoy respectively due to the ongoing AEI at Northpoint. 
  • Results were in line with expectations, with 9M17 DPU coming in at 76.3% of our full-year estimate.

Marginally positive rental reversions at +0.4%. 

  • Rental reversions would have been +5.4% if not for Bedok Point which registered a negative rental reversion of 30.2%.

Gearing declined 6bp qoq to 30.0%. 

  • Borrowing costs remained constant qoq at 2.2%.

Optimism from Northpoint pre-commitments. 

  • Northpoint AEI is on schedule and is expected to be completed by end-Sep 17. About 90% of the reconfigured areas have been pre-committed and management projected 82% occupancy by Sep 17. However, portfolio occupancy rate fell 3.7ppt yoy and 0.01ppt qoq due to the AEI at Northpoint.

Singapore retail update. 

  • According to CBRE, average prime retail rent dropped 2.2% qoq island-wide to S$24.75psf pm with particular weakness in the City Hall-Marina Centre and fringe areas. An additional 925,582sf of retail space in 2H17 and 1.64m sf in 2018 are in the supply pipeline. This is expected to put downward pressure on retail rents for 2017-18. 
  • Management, however, believes that its primarily suburban portfolio will remain resilient against wider retail sector challenges.




Vikrant Pandey UOB Kay Hian | http://research.uobkayhian.com/ 2017-07-25
UOB Kay Hian SGX Stock Analyst Report BUY Maintain BUY 2.260 Same 2.260



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