Frasers Logistics & Industrial Trust - CIMB Research 2017-07-31: 3QFY17 Results In Line

Frasers Logistics & Industrial Trust - CIMB Research 2017-07-31: 3QFY17 Results In Line FRASERS LOGISTICS & IND TRUST BUOU.SI

Frasers Logistics & Industrial Trust - 3QFY17 Results In Line

  • FLT's 3QFY17 DPU of 1.75 Scts (6.7% above IPO forecast) was in line with our expectations at 25% of our full-year forecast. 9MFY17 was at 76%.
  • We note that FLT will be undertaking its first AEI since listing. The estimated return of cost for the AEI at Stramit is 8.95%.
  • Maintain Add on FLT. There could be slight upside to our DDM-based target price as we have not factored in the acquisition of the seven properties.



In-line quarter

  • FLT produced an in-line quarter, with the positive variance (vs. IPO forecast) continuing to stem from lower interest savings of 2.8% p.a. vs. forecast of 3.4% p.a.  Also, the Martin Brower acquisition required lower-than-expected debt of A$20m.
  • 3QFY17 cash NPI was in line with our forecast at 25% of our full-year estimate.
  • Note that our numbers have not incorporated the effects of the private placement (75m new units were issued on 6 Jul 2017 for S$1.01/unit) as well as the proposed acquisition of the seven properties in Australia for A$169.3m (6.4% initial NPI yield) from its sponsor. On 26 Jul 2017, unitholders at the EGM approved the acquisitions.
  • In connection with the private placement, the manager declared an advanced distribution of 1.84 Scts for units in issue on 5 Jul 2017 payable on 29 Sep 2017.


Portfolio update

  • During the quarter, FLT renewed leases totalling 26.3k sq m across two properties at 18-20 Butler Boulevard, Adelaide, and 57-71 Platinum St, Queensland (Stramit property). The Stramit property renewal also provided an asset enhancement opportunity through a 1.2k sq m expansion as well as the installation of a 773 sq m awning. The estimated return of cost is 8.95%.
  • Portfolio occupancy held firm at 99.3% as at 30 Jun 2017, with a WALE of 6.7 years and minimal lease expiries of 0.2% (by gross rental income) for the remaining FY17F.
  • From listing date to 30 Jun 2017, FLT executed 140.3k sq m of new lease/lease renewals, representing 11.4% of total portfolio GFA (gross floor area), with a tenant retention rate of 94%.


Capital management

  • As at 30 Jun 2017, gearing was 29.3%. 79% of borrowings have been hedged into a fixed rate. Weighted average cost of borrowings is 2.8% p.a., with no debt expiry in FY17 and FY18.


Maintain Add

  • Pending the sell-side briefing this morning at 10am, we maintain Add on FLT with an unchanged DDM-based TP. We are also hosting a non-deal roadshow for FLT in Kuala Lumpur in these two days. 
  • There could be slight upside to our DPU estimates and target price as we have not factored in the acquisition of the seven properties.




YEO Zhi Bin CIMB Research | LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2017-07-31
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 1.100 Same 1.100



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