Frasers Property Limited - CGS-CIMB Research 2021-02-08: 1QFY21 A Stable Quarter

FRASERS PROPERTY LIMITED (SGX:TQ5)

Frasers Property Limited - 1QFY21 A Stable Quarter

In its update, Frasers Property (SGX:TQ5) indicated that its net debt to equity ratio improved to 99.3% at end-1QFY21 end-4QFY20: 105%) following the sale of its stake in Asia Retail Fund to Frasers Centrepoint Trust (SGX:J69U). It has a well-spread debt maturity profile, with 23% of its total debt expiring in less than a year.
Frasers Property's investment property portfolio in Singapore enjoys a healthy occupancy rate of 94.4%. It has scheduled an asset enhancement initiative (AEI) for Alexandra Point, to commence in Feb 2021, that will include setting up collaborative and community spaces and other building amenities to enhance occupant experience.
Frasers Property continues to maintain its focus on the non-discretionary retail sector, anchored by major supermarket tenants, particularly in Australia.

Frasers Property has S$1.7bn worth of unbilled residential sales across Australia, Singapore, China and Thailand as at end 1Q.
- In Singapore, it plans to launch the Fernvale Lane executive condominium in 4QFY21 while planning is in progress for the proposed redevelopment of Bedok Point into a residential project with commercial ground floor units.
- In Australia, it settled 539 units (~27% of its FY21F target) and sold 699 units in 1Q amid rising market prices, and has S$1.3bn of unbilled revenue at end-1Q.
- In Thailand it settled 772 units and sold 1,636 units in 1Q, bringing unrecognised revenue to S$71m, and it plans to launch 21 residential projects with a combined gross development value of S$1.3bn over the next 12 months.
- In China it has S$0.2bn of unbilled pre-sales at end-1Q.

Frasers Property’s industrial and logistics portfolio remained robust with high occupancy rate at end 1Q. It leased 5% of its total portfolio industrial and logistic leasable area in 1Q, in Europe and Australia, and is developing 11 new assets totaling 304,923 sq m, to be completed over the next two years.
Its Thailand industrial portfolio occupancy stayed stable at ~83% on the back of growing demand for industrial properties in Thailand amid supply chain configurations due to US-China trade tensions and COVID-19-related disruptions.

The hospitality segment continued to face challenges with revenue per available room (RevPAR) down 24.9-68.7% y-o-y across its geographic footprint.
Frasers Property is actively planning for regional and global campaigns to prepare for upcoming travel corridors while reviewing cost management measures. It is also targeting domestic tourism and preparing for upcoming openings of its properties in China, Vietnam and Malaysia.

We leave our Frasers Property's FY21-23F earnings estimates unchanged. Our RNAV and Target price remains unchanged at S$3.09 and S$1.70, assuming an unchanged 45% discount to RNAV.
Active capital deployment is a potential re-rating catalyst.
See Frasers Property Share Price; Frasers Property Target Price; Frasers Property Analyst Reports; Frasers Property Dividend History; Frasers Property Announcements; Frasers Property Latest News.
Downside risks: slower value unlocking activities due to the weaker macro outlook.

LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2021-02-08

SGX Stock Analyst Report ADD MAINTAIN ADD 1.70 SAME 1.70