Frasers Property (formerly: Frasers Cpt (FCL))

More like a vote of no confidence to the Thais, change of management , change of animal to some investors.

Focus will shift from local to oversea...

Frasers Centrepoint banking on strong overseas growth

SINGAPORE — Property developer Frasers Centrepoint’s strategy of venturing overseas will put it in a good position for further growth, given the increasingly cautious sentiment in the local property market, Group Chief Executive Lim Ee Seng said yesterday.

“We are cognizant of the overall market sentiment in the Singapore residential market, which has been affected by cooling measures,” he said, noting that in the last quarter of 2013, local private residential prices declined for the first time in two years, by 0.9 per cent.
...
http://www.todayonline.com/business/fras...eas-growth

(13-02-2014, 09:52 AM)cfa Wrote: More like a vote of no confidence to the Thais, change of management , change of animal to some investors.

Lim Ee Seng is still FCL's Group CEO till his contract expires in 2016 or 2017?

So technically the management team is roughly intact though one of Charoen's sons will assume the leadership mantle after CEO Lim's contract ends.

I think a major concern would be IPT or more specifically how TCC is going to push down the debt at the parent company to the operating company level (or reduce the debt at the parent company level).

I just got on board FCL. So I am vested now and my views will naturally be biased.

I always believe in conspiracy theory and with a big cap property counter so tightly held post an introductory list, naturally the Thai towkay will have plans. They have been embarking on capital reduction at F&N to achieve an optimal capital structure and improving ROE. Over time, F&N may gear up as well.

Over at FCL, there are already PR efforts to ensure that the good news get out there. Its not easy to convince institutional investors to add to their property weightage in an emerging market portfolio that has been underweighted by most fund managers. Anyway to summarise the good news:

i) A big cap property stock that looks similar to that of Capland (development with investment properties and REIT platform)

ii) locked in sales from residential segment yet to be booked worth $3bn. $2.1bn is attributed to Singapore where there is most fears due to the multiple anti-speculation measures. Only sore point is the North Point land where they outbidded the 2nd highest bidder with almost double the bid - but they do have the rationale - corner the central area to prevent anyone else into North Point. So managable landbank in Singapore means they can bargain hunt and vulture.

iii) growing exposure from overseas development - a welcome positive in the light of point 2.

iv) matured assets like Changi City point ripe for injection into FCT while there are plans to unlock hospitality assets into a new REIT if they can convince the market as well

v) interesting dividend policy as revealed in introductory prospectus Page 57:

Subject to the factors described below, our Board of Directors intends to recommend dividends of up to 75% of our net profit after tax after considering a number of factors, including our level of cash and reserves, results of operations, business prospects, capital requirements and surplus, general financial condition, contractual restrictions, the absence of any circumstances which might reduce the amount of reserves available to pay dividends, and other factors considered relevant by our Board of Directors, including our expected financial performance.

I find dividend policy very interesting since property counters (not REITs) seldom commit to explicit numbers.

vi) moratorium to dilute existing holdings for 6 months post listing of FCL on sgx.

My conspiracy theory:

Thai towkay has half completed their project - F&N appears to be priced like a F&B stock - high PER on high ROE (and improving with more capital reductions)

FCL at $1.41 trading at steep discount to book value $2.15 (excluding locked in profits on presales worth $3bn). CIMB has RNAV above $2.80. On all these measures, Thai towkay probably looking to dilute stake at a narrower discount levels. Earnings should be quite stable for next 3 years (CIMB forecasts)

So the following is what could happen to entice potential investors to take a slice of a big cap property counter from the Thais:

i) inject Changi City into FCT;
ii) work towards a listing of hospitality REIT;

i) & ii) will further build on the asset light strategy and lightened FCL debt burden

iii) dividend policy will be an interesting one to watch. FCL has a 30 Sept financial year end. The interims to Mar will be due latest mid May. What better time to declare an interim dividend for payment after June. Thai towkay can place out shares after 10 June. Assuming 50% payout, FCL can pay up to 8 cents DPS or 5.7% yield. If they decide to be more generous and pays 75%, it will be 12 cents DPS or 8.5% yield

Anyway, Thai towkay's can leverage on FCL strength to convince potential investors. In return, they can dilute their stake to lower their gearing.

So why is there never ending selling for time being - the entire package of F&N and 2 FCL remains firmly above the pre-demerger price. Moreover FCL being a new stock has no weighting on new index so whoever the remaining institution or tired retail guys are - they are probably unloading at no loss to them.

I think the longer the shareholders renewal process is - consolidation in technical analysis, it can be good. Thin liqudity can work towards FCL favour as well.

Our interests are all aligned with the Thai driver so sit tight and enjoy the upcoming episodes.

Vested
GG

^^ Agree totally. I wish I could write as eloquently as you... with much patience

I would probably sell FNN first before even FCL

(13-02-2014, 06:03 PM)greengiraffe Wrote: I just got on board FCL. So I am vested now and my views will naturally be biased.

I always believe in conspiracy theory and with a big cap property counter so tightly held post an introductory list, naturally the Thai towkay will have plans. They have been embarking on capital reduction at F&N to achieve an optimal capital structure and improving ROE. Over time, F&N may gear up as well.

Over at FCL, there are already PR efforts to ensure that the good news get out there. Its not easy to convince institutional investors to add to their property weightage in an emerging market portfolio that has been underweighted by most fund managers. Anyway to summarise the good news:

i) A big cap property stock that looks similar to that of Capland (development with investment properties and REIT platform)

ii) locked in sales from residential segment yet to be booked worth $3bn. $2.1bn is attributed to Singapore where there is most fears due to the multiple anti-speculation measures. Only sore point is the North Point land where they outbidded the 2nd highest bidder with almost double the bid - but they do have the rationale - corner the central area to prevent anyone else into North Point. So managable landbank in Singapore means they can bargain hunt and vulture.

iii) growing exposure from overseas development - a welcome positive in the light of point 2.

iv) matured assets like Changi City point ripe for injection into FCT while there are plans to unlock hospitality assets into a new REIT if they can convince the market as well

v) interesting dividend policy as revealed in introductory prospectus Page 57:

Subject to the factors described below, our Board of Directors intends to recommend dividends of up to 75% of our net profit after tax after considering a number of factors, including our level of cash and reserves, results of operations, business prospects, capital requirements and surplus, general financial condition, contractual restrictions, the absence of any circumstances which might reduce the amount of reserves available to pay dividends, and other factors considered relevant by our Board of Directors, including our expected financial performance.

I find dividend policy very interesting since property counters (not REITs) seldom commit to explicit numbers.

vi) moratorium to dilute existing holdings for 6 months post listing of FCL on sgx.

My conspiracy theory:

Thai towkay has half completed their project - F&N appears to be priced like a F&B stock - high PER on high ROE (and improving with more capital reductions)

FCL at $1.41 trading at steep discount to book value $2.15 (excluding locked in profits on presales worth $3bn). CIMB has RNAV above $2.80. On all these measures, Thai towkay probably looking to dilute stake at a narrower discount levels. Earnings should be quite stable for next 3 years (CIMB forecasts)

So the following is what could happen to entice potential investors to take a slice of a big cap property counter from the Thais:

i) inject Changi City into FCT;
ii) work towards a listing of hospitality REIT;

i) & ii) will further build on the asset light strategy and lightened FCL debt burden

iii) dividend policy will be an interesting one to watch. FCL has a 30 Sept financial year end. The interims to Mar will be due latest mid May. What better time to declare an interim dividend for payment after June. Thai towkay can place out shares after 10 June. Assuming 50% payout, FCL can pay up to 8 cents DPS or 5.7% yield. If they decide to be more generous and pays 75%, it will be 12 cents DPS or 8.5% yield

Anyway, Thai towkay's can leverage on FCL strength to convince potential investors. In return, they can dilute their stake to lower their gearing.

So why is there never ending selling for time being - the entire package of F&N and 2 FCL remains firmly above the pre-demerger price. Moreover FCL being a new stock has no weighting on new index so whoever the remaining institution or tired retail guys are - they are probably unloading at no loss to them.

I think the longer the shareholders renewal process is - consolidation in technical analysis, it can be good. Thin liqudity can work towards FCL favour as well.

Our interests are all aligned with the Thai driver so sit tight and enjoy the upcoming episodes.

Vested
GG

very well written, I strongly agree with most of the points

(13-02-2014, 06:03 PM)greengiraffe Wrote: I just got on board FCL. So I am vested now and my views will naturally be biased.

I always believe in conspiracy theory and with a big cap property counter so tightly held post an introductory list, naturally the Thai towkay will have plans. They have been embarking on capital reduction at F&N to achieve an optimal capital structure and improving ROE. Over time, F&N may gear up as well.

Over at FCL, there are already PR efforts to ensure that the good news get out there. Its not easy to convince institutional investors to add to their property weightage in an emerging market portfolio that has been underweighted by most fund managers. Anyway to summarise the good news:

i) A big cap property stock that looks similar to that of Capland (development with investment properties and REIT platform)

ii) locked in sales from residential segment yet to be booked worth $3bn. $2.1bn is attributed to Singapore where there is most fears due to the multiple anti-speculation measures. Only sore point is the North Point land where they outbidded the 2nd highest bidder with almost double the bid - but they do have the rationale - corner the central area to prevent anyone else into North Point. So managable landbank in Singapore means they can bargain hunt and vulture.

iii) growing exposure from overseas development - a welcome positive in the light of point 2.

iv) matured assets like Changi City point ripe for injection into FCT while there are plans to unlock hospitality assets into a new REIT if they can convince the market as well

v) interesting dividend policy as revealed in introductory prospectus Page 57:

Subject to the factors described below, our Board of Directors intends to recommend dividends of up to 75% of our net profit after tax after considering a number of factors, including our level of cash and reserves, results of operations, business prospects, capital requirements and surplus, general financial condition, contractual restrictions, the absence of any circumstances which might reduce the amount of reserves available to pay dividends, and other factors considered relevant by our Board of Directors, including our expected financial performance.

I find dividend policy very interesting since property counters (not REITs) seldom commit to explicit numbers.

vi) moratorium to dilute existing holdings for 6 months post listing of FCL on sgx.

My conspiracy theory:

Thai towkay has half completed their project - F&N appears to be priced like a F&B stock - high PER on high ROE (and improving with more capital reductions)

FCL at $1.41 trading at steep discount to book value $2.15 (excluding locked in profits on presales worth $3bn). CIMB has RNAV above $2.80. On all these measures, Thai towkay probably looking to dilute stake at a narrower discount levels. Earnings should be quite stable for next 3 years (CIMB forecasts)

So the following is what could happen to entice potential investors to take a slice of a big cap property counter from the Thais:

i) inject Changi City into FCT;
ii) work towards a listing of hospitality REIT;

i) & ii) will further build on the asset light strategy and lightened FCL debt burden

iii) dividend policy will be an interesting one to watch. FCL has a 30 Sept financial year end. The interims to Mar will be due latest mid May. What better time to declare an interim dividend for payment after June. Thai towkay can place out shares after 10 June. Assuming 50% payout, FCL can pay up to 8 cents DPS or 5.7% yield. If they decide to be more generous and pays 75%, it will be 12 cents DPS or 8.5% yield

Anyway, Thai towkay's can leverage on FCL strength to convince potential investors. In return, they can dilute their stake to lower their gearing.

So why is there never ending selling for time being - the entire package of F&N and 2 FCL remains firmly above the pre-demerger price. Moreover FCL being a new stock has no weighting on new index so whoever the remaining institution or tired retail guys are - they are probably unloading at no loss to them.

I think the longer the shareholders renewal process is - consolidation in technical analysis, it can be good. Thin liqudity can work towards FCL favour as well.

Our interests are all aligned with the Thai driver so sit tight and enjoy the upcoming episodes.

Vested
GG

GG, your highly convicted thesis may be confusing to some but looks pretty convincing for me.

Let's hope that the Thai Towkay's interests are congruent with ours and not contradictory.

More confidence in FCL and Thai Towkay:

http://infopub.sgx.com/FileOpen/Frasers%...leID=20041

Maiden Annual Report Page 22:

Dividends
In view of FCL’s strong financial
achievement in 2013, FCL has paid a
$150 million cash dividend to F&N prior
to the distribution in-specie of FCL.
The Board of Directors has proposed a
further final one-tier tax exempt cash
dividend of $50 million (or $0.0173
per share) to be paid after the listing
of FCL on the SGX-ST. The aggregate
dividend payout in 2013 represents
approximately 50% of FCL’s attributable
net profit before fair value changes and
exceptional items.

A mate highlighted to me the dividends that they paid immediately after the introductory listing. So the signs are already there.

Not only undervalued but a yield stock in the making. Why buy FCT when you can buy mother FCL when asset light model is always accorded a higher rating like Capland, ARA?

GG

(13-02-2014, 08:27 PM)greengiraffe Wrote: Not only undervalued but a yield stock in the making. Why buy FCT when you can buy mother FCL when asset light model is always accorded a higher rating like Capland, ARA?

GG

Because children usually have to pay higher dividend to feed the parent, so usually buying the children makes sense.

But in FCL case, they need to pay to the grandparent, so that helps minorities as well. I'm not sure how much asset TCC actually have, but I think FCL will be substantially larger in 3 years' time.

Shuffling assets around does not necessarily create wealth. For a self-made tycoon, he must have known it.

He is good for his debt until not. But before that, there is no rush to realize value when the price is not right.