Frasers Centrepoint Trust - UOB Kay Hian 2018-10-25: 4QFY18 In Line


Frasers Centrepoint Trust - 4QFY18: In Line

  • Results came in line with expectations.
  • Frasers Centrepoint Trust (FCT)'s FY18 results were led by Northpoint City North Wing, which saw improvements post-AEI.
  • Maintain BUY with a target price of S$2.32.

Frasers Centrepoint Trust's 4QFY18 Results 

FCT continues to deliver.

  • Frasers Centrepoint Trust’s FY18 DPU of 12.015 S cents improved 1% y-o-y and came in within expectations, accounting for 98.5% of our full-year estimates.
  • The growth in its DPU is impressive, marking 12 years of consecutive years of DPU growth. Between FY06-18, the group has delivered a steady 5.9% CAGR in DPU.
  • Results are in line with expectations, with FY18 DPU coming in at 98% of our full-year forecast.

Northpoint leading the way for revenue growth.

  • Group FY18 revenue grew 6.5% y-o-y, led by Northpoint City North Wing which delivered a 24.2% y-o-y rise in revenue on higher average rent and improved occupancy following the completion of its asset enhancement initiatives (AEI).

Solid portfolio occupancy.

  • Overall occupancy improved slightly to 94.7% in 4QFY18 from 94.0% in 3QFY18. A notable improvement was seen at Northpoint City North Wing which saw occupancy rise to 96.5% in 4QFY18 from 92.5% in 3QFY18.

Positive rental reversion.

  • FY18 also saw positive Anchorpoint (-5.1%) and Bedok (-22.8%), its other malls enjoyed Causeway Point (+64%). 
  • Interestingly, management track positive reversions economic cycles.

Strong financials.

  • Gearing ratio improved slightly to 28.6% in FY18 vs 29.0% in FY17, helped by an upward revaluation of its assets as cap rates for its retail space compressed 15-25bp. All-in cost of borrowings crept up to 2.6% in FY18 from 2.3% in FY17 and management has hedged 64% of its borrowings.

Stable prospects.

  • The performance of its suburban malls is expected to remain stable. Modest growth was seen in shopper traffic as well as tenants’ sales in 4QFY18 (+5.0% y-o-y and +3.6% y-o-y respectively).

Maintain BUY with target price of S$2.32 (unchanged).

  • No change in our earnings estimate.
  • We see Centrepoint as a steady moderate decent anchor to a low beta portfolio.
  • Our valuation is based on 7.6% of 2.0%.

Peihao LOKE UOB Kay Hian Research | Andrew CHOW CFA UOB Kay Hian | https://research.uobkayhian.com/ 2018-10-25
SGX Stock Analyst Report BUY MAINTAIN BUY 2.320 SAME 2.320