FRASERS CENTREPOINT TRUST
J69U.SI
Frasers Centrepoint Trust - Chugging along
- High occupancy underpins earnings momentum.
- Shopper traffic and tenant sales are still rising.
- Northpoint AEI to start early 2016.
- Deep balance sheet capacity for acquisitions; low gearing of 28.2% translates to significant debt headroom.
- Maintain Add with a target price of S$2.22.
■ Portfolio occupancy remains at a healthy 96%
- Portfolio occupancy remained relatively stable at 96%, with take-ups at Causeway Point (CWP), Northpoint (NP) and Anchorpoint holding steady.
- Changi City Point (CCP) saw some fluctuation in occupancy levels due to the ongoing tenant remixing.
- Bedok Point occupancy remained at 84.2% and management will continue to look at avenues to improve this position.
■ Shopper traffic and tenant sales trending up
- Portfolio shopper traffic grew 8.2% in 4QFY15, largely driven by double-digit growth in patronage at CP and NP.
- Tenant sales improved in tandem. This helped to underpin positive rental reversions of 7.1% during the quarter.
- CP and YewTee Point saw high single-digit reversions while Anchorpoint enjoyed a 14.7% upside from lease renewals. This bodes well for the 30% and 35% of portfolio gross rents due to be re-contracted in FY16 and FY17 respectively.
■ Northpoint AEI to commence in Mar 16
- NP AEI is scheduled to commence in Mar 16, and to be completed over the next 18 months.
- The AEI will focus on enhancing shopper experience by boosting diversity and to enable the mall to benefit from the integration with the upcoming retail component of Northpoint City.
- There could be some tenant displacements during this period, but FCT has a good track record in managing these well and it expects to generate positive return upon completion of the AEI.
- Previous AEI had generated >10% ROI.
■ Deep pipeline from sponsor
- FCT has a deep potential acquisition pipeline from its sponsor. This includes the Waterway Point and Northpoint City, which are currently under development.
- With a low gearing of 28.2%, FCT has significant debt headroom to fund new purchases in the longer run.
■ Maintain Add rating
- We maintain our Add rating given FCT’s stable outlook and FY16-17F dividend yield of 6.4-6.5%.
- Our DDM-backed target price of S$2.22 offers investors 18% upside.
- Potential catalyst could come when more Northpoint AEI details are revealed or from continued improvement in operating metrics.
LOCK Mun Yee
CIMB Securities
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http://research.itradecimb.com/
2015-12-09
CIMB Securities
SGX Stock
Analyst Report
2.22
Same
2.22
