Frasers Centrepoint Trust (FCT) reported a strong set of 4QFY12 results yesterday. Expectedly, the performance was driven by Causeway Point (CWP) following the substantial completion of the mall’s refurbishment and full-year contribution from Bedok Point. Positive rental reversion of 8.9% was also achieved during the quarter. As at 30 Sep, FCT’s portfolio occupancy was largely unchanged at 93.6% (93.7% in 3Q), but looks set to improve when the asset enhancement works at CWP complete in Dec. We continue to like FCT for its pure suburban mall exposure and growth potential. Based on our understanding, the business park at One@Changi City may possibly obtain TOP by end-2012, while its retail mall occupancy may have already stabilized above 90%. Hence, we believe the injection of Changi City Point may likely happen in FY13, which should provide FCT with next level of growth. Maintain BUY with higher fair value of $2.13 (S$1.97 previously) as we update our model to incorporate firmer cap rates.
FY12 results in line with our projections
Frasers Centrepoint Trust (FCT) reported a strong set of 4QFY12 results yesterday. NPI grew by 13.7% YoY to S$28.7m, while distributable amount rose 21.8% to S$22.3m. DPU reached its record high at 2.71 S cents (+15.3%), partially boosted by a distribution of S$1.2m that was retained in 1HFY12. This was spot on with our 4Q DPU forecast but was ahead of street’s expectations. As a result, FY12 DPU amounted to 10.01 S cents, up 20.3%. This implies a decent yield of 5.3%.
Operating performance looks set to improve
Expectedly, the strong performance was driven by Causeway Point (CWP) following the substantial completion of the mall’s refurbishment and full-year contribution from Bedok Point. Positive rental reversion of 8.9% was also achieved during the quarter. As at 30 Sep, FCT’s portfolio occupancy was largely unchanged at 93.6% (93.7% in 3Q). Management reiterated that the asset enhancement initiative (AEI) at CWP is on track for full completion and is expected to reach full occupancy by Dec as the refurbished space on levels 5 and 7 are progressively leased out to tenants. In addition, average current passing rent is north of S$12.20, significantly higher than the rent of S$10.20 prior to AEI.
Maintain BUY with higher fair value of S$2.13
We also note that FCT’s financial position has strengthened. Gearing ratio improved to 30.1% from 31.3% a year ago (31.7% in 3Q), due mainly to an enlarged asset base and asset revaluation gain of S$100.7m (NAV up 8.5% YoY). We continue to like FCT for its pure suburban mall exposure and growth potential. Based on our understanding, the business park at One@Changi City may possibly obtain TOP by end-2012, while its retail mall occupancy may have already stabilized above 90%. Hence, we believe the injection of Changi City Point may likely happen in FY13, which should provide FCT with next level of growth. Maintain BUY with higher fair value of $2.13 (S$1.97 previously) as we update our model to incorporate firmer cap rates.
Frasers Centrepoint Trust (FCT) reported a strong set of 4QFY12 results yesterday. NPI grew by 13.7% YoY to S$28.7m, while distributable amount rose 21.8% to S$22.3m. DPU reached its record high at 2.71 S cents (+15.3%), partially boosted by a distribution of S$1.2m that was retained in 1HFY12. This was spot on with our 4Q DPU forecast but was ahead of street’s expectations. As a result, FY12 DPU amounted to 10.01 S cents, up 20.3%. This implies a decent yield of 5.3%.
Operating performance looks set to improve
Expectedly, the strong performance was driven by Causeway Point (CWP) following the substantial completion of the mall’s refurbishment and full-year contribution from Bedok Point. Positive rental reversion of 8.9% was also achieved during the quarter. As at 30 Sep, FCT’s portfolio occupancy was largely unchanged at 93.6% (93.7% in 3Q). Management reiterated that the asset enhancement initiative (AEI) at CWP is on track for full completion and is expected to reach full occupancy by Dec as the refurbished space on levels 5 and 7 are progressively leased out to tenants. In addition, average current passing rent is north of S$12.20, significantly higher than the rent of S$10.20 prior to AEI.
Maintain BUY with higher fair value of S$2.13
We also note that FCT’s financial position has strengthened. Gearing ratio improved to 30.1% from 31.3% a year ago (31.7% in 3Q), due mainly to an enlarged asset base and asset revaluation gain of S$100.7m (NAV up 8.5% YoY). We continue to like FCT for its pure suburban mall exposure and growth potential. Based on our understanding, the business park at One@Changi City may possibly obtain TOP by end-2012, while its retail mall occupancy may have already stabilized above 90%. Hence, we believe the injection of Changi City Point may likely happen in FY13, which should provide FCT with next level of growth. Maintain BUY with higher fair value of $2.13 (S$1.97 previously) as we update our model to incorporate firmer cap rates.
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