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Frasers Centrepoint Trust - Maybank Kim Eng 2021-10-27: Retail Recovery Play

FRASERS CENTREPOINT TRUST (SGX:J69U) | SGinvestors.io FRASERS CENTREPOINT TRUST (SGX:J69U)

Frasers Centrepoint Trust - Retail Recovery Play


Resilient suburban retail metrics

  • Frasers Centrepoint Trust (SGX:J69U)’s revenue and NPI jumped ~160% y-o-y and ~213% y-o-y in 2H21, but was both lower at ~4% h-o-h, while its FY21 DPU at S$0.1209 was strong at +33.7% y-o-y; it missed our estimates but was ahead of the street.
  • We continue to see suburban malls leading Singapore’s retail sector recovery in its long reopening phase, with Frasers Centrepoint Trust’s resilient occupancies and improving rental reversions from its more sizeable AUM supporting DPU recovery in FY22.
  • We have fine-tuned DPUs and kept our DDM-based target price at S$2.90 (COE: 6.2%, LTG: 2.0%). Valuations at 5.5% DPU are undemanding versus peers and history, and Frasers Centrepoint Trust remains within our top S-REIT picks. BUY.



Stronger occupancy, de-risking FY22 expiries

  • Frasers Centrepoint Trust's portfolio occupancy rose to 97.3% (from 96.4% in 3Q21) with improvements across 8 of its 11 properties, at between 0.3ppt (at Northpoint) and 4.6ppt (at Waterway Point). Lower occupancies at Tampines 1 (99.2% to 97.1%) and White Sands (96.3% to 95.4%) reflect timing of renewals and should rise in 1Q22.
  • It has de-risked about 25% of the ~900k sf of leases expiring in FY22, which are in advanced negotiations, according to management. We expect occupancies to be resilient, with the leases concentrated at its larger destination malls, Causeway Point (23%) and Waterway Point (17%).


Flattish rental reversions, to improve in FY22



Strong balance sheet, further capital recycling






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-10-27
SGX Stock Analyst Report BUY MAINTAIN BUY 2.900 SAME 2.900



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