FRASERS PROPERTY LIMITED
SGX: TQ5
Frasers Property Limited - Higher Recurring Income Base
- Frasers Property Limited's 1HFY9/18 earnings were a little below our estimates, at 33.8% of our FY18 forecast.
- Better Singapore, Australia, Europe and rest of Asia performance offset lower hospitality contributions.
- Frasers Property Limited has S$3.1bn of unbilled residential sales across Singapore, Australia and China.
- Maintain ADD with unchanged Target Price of S$2.40.
2QFY9/18 results highlights
- Frasers Property Limited (FPL) reported 2QFY18 revenue of S$841.7m, +19% y-o-y, while core net profit rose 74.5% y-o-y to S$124.2m, thanks to improvement in Singapore, Australia and Europe/rest of Asia operations, partly offset by a dip in hospitality business.
- For 1H, core net profit showed a 23.6% decline to S$193.4m, thanks to a high base in the previous year from lumpy overseas development profits.
- 1H recurrent income formed 71% of PBIT. The group proposed an interim DPS of 2.4 Scts.
Singapore boosted by higher residential and rentals
- Singapore 2Q PBIT rose 17% y-o-y thanks to greater residential and rental contributions, partly offset by lower REIT income. Parc Life EC (90% sold) was completed in 2QFY18 and there were progressive sales and billings from North Park Residences and Seaside Residences (70% sold). It had a balance of S$0.9bn of unrecognised residential revenue as at 2Q18.
- Planning of the Jiak Kim St site (about 500 units) is underway and slated for launch in 1H19.
- Frasers Tower is over 70% pre-committed ahead of completion in 1H18.
Australia saw improvement across all operations
- 2Q Australia PBIT jumped 60% y-o-y to S$88m thanks to higher residential, commercial & industrial and REIT contributions. 624 homes were handed over in 2Q and unrecognised residential revenue was S$1.9bn as at end-2Q. Another 1,656 units are planned to be settled for 2HFY18.
- In the commercial and industrial segment, it has a further 14 facilities to be delivered over the next 15 months, with an estimated GDV of S$460m.
- Office portfolio remains well occupied at 97.4%.
Hospitality dragged by lower UK hotel contributions
- The hospitality division saw a 30% decline in PBIT in 2Q, largely affected by lower F&B revenue at the Malmaison Hotel du Vin properties in the UK as well as pre-opening expenses from the Frasers Suites Dalian.
- Fee income was also lower in 2Q.
Europe and rest of Asia lifted by profits from Geneba and UK
- 2Q PBIT from Europe/rest of Asia surged to S$93.6m thanks to inclusion of income from Geneba Properties and contributions from business parks in the UK.
- There was also settlement of 130 units from P3 Baitang One and P4 Chengdu Logistics Hub while Thailand and Vietnam saw higher income from Golden Land and TICON.
- Frasers Property Limited had recently announced the proposed divestment of 21 logistics facilities in Germany and Netherlands to Frasers Logistics & Industrial Trust (FLT) for an aggregate consideration of €316.2m.
Maintain ADD
- We tweak our FY18-20F earnings to factor in the divestment of 21 logistics properties to Frasers Logistics & Industrial Trust (FLT). We maintain our ADD rating and Target Price of S$2.40.
- We continue to like Frasers Property Limited’s strong recurring income base which makes up 71% of operating PBIT.
- Upside catalysts include capital recycling to lower its current net debt-to-equity ratio of 95.3% while downside risks include forex volatility given 70% of its PBIT is derived outside of Singapore.
LOCK Mun Yee
CGS-CIMB
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https://research.itradecimb.com/
2018-05-10
SGX Stock
Analyst Report
2.400
Same
2.400
