FRASERS CENTREPOINT TRUST (SGX:J69U)
Frasers Centrepoint Trust - Looking Forward To The Recovery
- Frasers Centrepoint Trust's 2HFY20 DPU -26.1% y-o-y.
- Resilient operating metrics but leasing environment remains challenging.
- Bumping up our fair value by 13% to S$2.75.
Frasers Centrepoint Trust's 2HFY20 results below our expectations
- Frasers Centrepoint Trust (SGX:J69U)’s 2HFY20 results fell short of our expectations, but the outlook appears brighter now given
- positive developments on the vaccine front, and
- improving operating metrics observed at Frasers Centrepoint Trust’s malls.
- Frasers Centrepoint Trust's 2HFY20 gross revenue and NPI fell 33.8% and 42.8% y-o-y to S$64.5m and S$38.6m, respectively, due largely to rental relief provided to tenants. Excluding this, NPI would have declined only 2.2% to S$66.0m. DPU fell 26.1% y-o-y to 4.372 cents.
- For FY20, Frasers Centrepoint Trust’s NPI dipped 20.4% to S$110.9m, or -0.7% if the rental relief impact was excluded. DPU of 9.042 cents represented a decline of 25.1% and was 8.5% below our forecast.
Rental reversions stayed positive in FY20; tenants’ sales saw firm recovery
- Frasers Centrepoint Trust’s portfolio occupancy stood at 94.9%, as at 30 Sep 2020, which was an uptick of 0.3 ppt q-o-q.
- Rental reversions were positive for all its malls in FY20, coming in at an average of 4.2%, although this was a moderation as compared to 1HFY20 (+5.2%).
- Looking ahead, we see some renewal risks as Frasers Centrepoint Trust has 32.6% of its total gross rental income up for renewal in FY21. Management has already completed ~20% of its FY21 lease expiries and highlighted that the leasing environment remains challenging.
- On a positive note, Frasers Centrepoint Trust’s portfolio tenant sales saw only a slight y-o-y decline of 2.2% in Aug and 5.6% in Sep, a reflection of the importance of suburban malls and working from home trends. However, shopper traffic has only recovered to around 60-70% of pre-COVID-19 levels.
Raising Frasers Centrepoint Trust's fair value estimate to S$2.75
- After factoring in Frasers Centrepoint Trust’s additional stake acquisition in PGIM Real Estate AsiaRetail Fund Limited (ARF), in which it now owns 100%, we lift our Frasers Centrepoint Trust's FY21F and FY22F DPU forecasts by 3.3% and 5.4%, respectively. Rolling forward our valuations and increasing our terminal growth rate assumption by 50 bps to 1.5% to account for an improved operational outlook, our fair value estimate is raised from S$2.44 to S$2.75.
- See Frasers Centrepoint Trust Share Price; Frasers Centrepoint Trust Target Price; Frasers Centrepoint Trust Analyst Reports; Frasers Centrepoint Trust Dividend History; Frasers Centrepoint Trust Announcements; Frasers Centrepoint Trust Latest News.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2020-11-11
SGX Stock
Analyst Report
2.75
UP
2.440
