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29-10-2012, 05:18 PM
(This post was last modified: 29-10-2012, 05:22 PM by yanziyang.)
From OCBC Investment Research:
Frasers Commercial Trust: A brand new start
● In-line 4Q performance
● Exit of Japan market
● Well-positioned for growth
Strong 4QFY12 results
Frasers Commercial Trust (FCOT) reported its 4QFY12 results last Friday. NPI grew by 8.7% YoY to S$26.5m, while distributable income jumped 17.3% to S$11.3m. The strong growth came on the back of higher rental contribution from Central Park and an increased stake in Caroline Chisholm Centre.
DPU for the quarter stood at 1.75 S cents (+15.1% YoY) and is consistent with our 4Q estimate of 1.76 S cents (consensus: 1.86 S cents). For FY12, DPU amounted to 6.69 S cents (+16.3%), translating to a 5.6% yield. Starting from FY13, FCOT will commence quarterly distributions. Hence, unitholders will receive its final semi-annual distribution for 2HFY12.
Divestment of Japan properties
FCOT also announced the completion of divestment of its Japan properties, after months of market anticipation. Total consideration was a nominal JPY4 as the holding vehicles for the properties were at an aggregate net liability of SS$4.9m. Nevertheless, we view the transaction have been recording weak performance, 2) the divestment would improve portfolio occupancy to 94.9% from reported 93.8%, and 3) weighted average lease to expiry would be extended to 5.0 years from 4.7 years. More importantly, gearing ratio is expected to drop from 36.8% to 28.6% (including partial prepayment of its AUD and SGD loans), with no debt maturing until FY15. This will significantly strengthen its financial position and flexibility, and aid FCOT in seeking the release of two properties from its securitized pool.
Maintain BUY
Regarding the space vacated by MMC at China Square Central (CSC), FCOT also updated that 76% of the space has been released, including 49,000 sqft by GroupM starting Apr 2013. Going forward, FCOT intends to embark on Phase 2 of refurbishment works at CSC by end-2012, which should further enhance its positioning. We are positive on FCOT’s transformation, strong execution and growth potential in FY13. We re-jig our forecasts to incorporate the developments, but our fair value is
unchanged at S$1.31. BUY. (Kevin Tan)
From DMG:
Frasers Commercial Trust: Turning into a stronger REIT (BUY, S$1.20, TP: S$1.41)
Pang Ti Wee (+65 62323 3883, tiwee.pang@sg.oskgroup.com)
4QFY12 DPU in line with expectations. Frasers Commercial Trust (FCOT) reported 4QFY12
DPU of 1.75S¢ (+15% YoY). Together with the first three quarters, FY12 DPU came to 6.69S¢;
1.6% below our FY12 DPU estimate. Revenue and net property income for this quarter came in at
S$35.6m (+17% YoY) and S$26.5m (9% YoY) respectively. Distributable income came in at
S$16.1m (+12% YoY), mainly attributable to the additional income contribution from the additional
50% stake in Caroline Chisholm Centre and the one-off gain of S$72.8m from the divestment of
KeyPoint. Recently, FCOT has also divested its three properties in Japan. By doing so, coupled
with the proceeds from the divestment of KeyPoint, gearing has been pared down to a healthy
level of 28.6% (vs 36.8% previously). Going forward, with S$198.3m of proceeds left, we believe
FCOT will either (i) try to acquire a property that gives out a yield of at least 5.5% or (ii) redeem a
portion of its CPPU which is currently giving out an annual yield of 5.5%. Given FCOT low gearing,
high occupancy rate of 94.9%, AEI at China Square Central and a strong Australia portfolio, we
continue to favor this trust for its attractiveness and maintain our BUY rating on FCOT with a DDM
based (COE: 7.9%; TGR: 1.0%) TP of S$1.410
Gearing brought down from 36.8% to 28.6%. Since 28th September, FCOT has completed its
divestment of KeyPoint and announced that 44.6% of the net proceeds from the divestment will be
used to pay back portions of two term loan facilities. By doing so, net gearing of FCOT will be
adjusted to a healthy level of 32.1%. Together with the divestment of FCOT’s Japanese properties,
the current gearing has reached a low 28.6%; giving the trust a head room of c.S$120m for future
possible acquisitions.
Redemption of CPPU expected to be the next key driver. As highlighted in our previous report,
after the divestment of KeyPoint and paring down gearing, FCOT is most likely going to redeem a
portion of their CPPU. Given that CPPU can only be redeemed at the beginning of each quarter,
we speculate that the manager of FCOT will announce the redemption a portion of its CPPU by
December 2012.
Maintain BUY with higher TP of S$1.410. In addition, as the manager of FCOT completes the
divestment of the underperforming properties in its portfolio, we believe the manager will focus on
improving the quality of its existing portfolio through AEIs while at the same time look out to
acquire better yielding properties. In view of these positive factors we have maintained our BUY
rating on FCOT with a revised DDM based TP of S$1.41.
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Credit must go to the managment for transforming FCOT from an unloved counter to where it is today.
MV $1.345. Possible rent increase from its China Square Central may imply higher distributions.
I also like the idea of receiving quarterly dividend instead of half yearly.
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I always felt F&N are great REIT Managers - FCT has reported 6 years of growing DPU with relatively safe gearing while FCOT has done remarkably well since the F&N rescue. That's how a REIT should be run imo.
(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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When I did not apply for the conversion of the FCOT CPPU to FCOT, the FCOT management redeemed my FCOT CPPU paying me cash in the earlier redemption.
In the last redemption, I have called to enquire and submitted my conversion form to convert my FCOT CPPU to FCOT. The management issued a SGX notice that none of the FCOT CPPU converted to FCOT. Does the management have the perogative to accept or reject the conversion?
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(23-10-2013, 06:51 PM)mkmk Wrote: Financial Statements: http://infopub.sgx.com/FileOpen/4Q2013-A...eID=260748
Press Announcement: http://infopub.sgx.com/FileOpen/FY13-Med...eID=260750
Presentation Slides: http://infopub.sgx.com/FileOpen/FY13-Fin...eID=260751
Portfolio Detail Slides: http://infopub.sgx.com/FileOpen/FY13-Pro...eID=260752
Quote:FCOT records highest full year distributable income of S$51.4 million, an increase of 19%
- FY13 DPU up 17.0% to 7.83 cents
- 4QFY13 DPU up 18.9% to 2.08 cents
- Strong portfolio occupancy of 97.9%
(not vested)
The expiry of the master lease in Alexandra Technopark (23.5% of NPI) will likely give a pretty decent boost to distributable income judging by the net rent of $1.8 psf vs passing gross rent (not net) of $3.5 psf.
(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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