Frasers Logistics & Commercial Trust - CGS-CIMB Research 2021-04-09: FLCT To Be Included As STI Constituent

FRASERS LOGISTICS & COMMERCIAL TRUST (SGX:BUOU) | SGinvestors.io FRASERS LOGISTICS & COMMERCIAL TRUST (SGX:BUOU)

Frasers Logistics & Commercial Trust - FLCT To Be Included As STI Constituent




Frasers Logistics & Commercial Trust (FLCT) to be included as STI constituent from 13 Apr



Robust industrial/robust segment, stable commercial segment

  • Operations-wise, according to the 4Q20 update of property consultant Jones Lang Lasalle, the Australia industrial market remained stable with national leasing activity trending up on a q-o-q basis as occupier activity picked up in Melbourne, Perth and Sydney. Based on the same report, market rents continued to tick up slightly y-o-y in Sydney and Melbourne South East area while Perth remained stable.
  • Looking ahead, we believe the demand for logistics and industrial space will continue to be underpinned by the pick-up in economic activity amid a global recovery. As at end 1QFY21 (end-Dec 2020), Frasers Logistics & Commercial Trust has 2% and 5.7% of industrial portfolio leases to be renewed in remainder of FY21F and FY22F, respectively, in Australia.
  • Meanwhile, we anticipate the Singapore commercial portion, particularly the retail component at Cross Street Exchange, should benefit from the easing of workplace restrictions in Singapore, to allow up to 75% of employees to return to the workplace from 5 Apr 2021.


Potential tailwinds from stronger forex

  • Based on Bloomberg data, the A$ and £ had strengthened against the S$ by ~0.6% and 2.2% respectively since Jan to Apr 2021, and by a quarterly average ~10% and 4.5% respectively from a year ago. We believe this could provide another tailwind to Frasers Logistics & Commercial Trust’s earnings.
  • We estimate Frasers Logistics & Commercial Trust generates 80-85% of portfolio revenue from its Australia and Europe assets. To be sure, Frasers Logistics & Commercial Trust adopts a six-monthly rolling hedge policy for its overseas earnings, and the strengthening trend in the A$ and € would likely benefit distribution income, in our view.

Reiterate ADD rating






LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-04-09
SGX Stock Analyst Report ADD MAINTAIN ADD 1.570 SAME 1.570



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......