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PR Newswire
04-11-2015, 08:00 PM
FCL, DBS maintain BUY: (Final results to FY9/15 out after mkt close 6 Nov 15):
An Emerging Contender
Strong income visibility from locked-in residential sales.
Frasers Centrepoint Limited (FCL) continues to offer strong
earnings visibility by having locked-in almost c.S$3.5bn sales
across its various major markets of Singapore, China and
Australia. The group has executed well which enables it to
substantially de-risk its exposures in the slowing residential
market in Singapore, while its development projects in
Australia are mainly in the mass- to mid-end segments which
continue to deliver consistent sales.
Growing recurring revenues from its commercial and
hospitality divisions. The group has a long target to grow
recurring revenues to 60% of total revenues in the medium
term. To reach this target, FCL will be (i) completing a number
of retail and office projects in Singapore by 2018, and (ii)
Frasers Hospitality is also expected to see its footprint expand
to 30,000 managed units by 2019. In addition, the recent
acquisition of the Malmaison Hotel du vin Group (MHDV),
which has a portfolio of 29 boutique lifestyle hotels and 2,082
keys within 25 regional cities in the UK, will further deepen its
presence and clientele reach in Europe.
Tapping on existing capital-recycling platforms. FCL currently
performs capital recycling through its listed REITs which the
group can opportunistically divest mature yield properties to
free up capital and reinvest in other higher-ROE projects.
Valuation:
We have a BUY recommendation on FCL, with a target price of
S$2.36 based on a 30% discount to RNAV. We think that FCL
is attractive at 0.6x P/Bk NAV and believe that the stock is
trading at this level largely due to its tight liquidity constraints.
Key Risks to Our View:
Dependent on the outlook of Australia's real estate
market, currency outlook. The group derives an estimated
30% of PBIT and 35% from Australia which is dependent on
the real estate market and whose returns could be impacted
by the weakening AUD/SGD exchange rate.
An Emerging Contender
Strong income visibility from locked-in residential sales.
Frasers Centrepoint Limited (FCL) continues to offer strong
earnings visibility by having locked-in almost c.S$3.5bn sales
across its various major markets of Singapore, China and
Australia. The group has executed well which enables it to
substantially de-risk its exposures in the slowing residential
market in Singapore, while its development projects in
Australia are mainly in the mass- to mid-end segments which
continue to deliver consistent sales.
Growing recurring revenues from its commercial and
hospitality divisions. The group has a long target to grow
recurring revenues to 60% of total revenues in the medium
term. To reach this target, FCL will be (i) completing a number
of retail and office projects in Singapore by 2018, and (ii)
Frasers Hospitality is also expected to see its footprint expand
to 30,000 managed units by 2019. In addition, the recent
acquisition of the Malmaison Hotel du vin Group (MHDV),
which has a portfolio of 29 boutique lifestyle hotels and 2,082
keys within 25 regional cities in the UK, will further deepen its
presence and clientele reach in Europe.
Tapping on existing capital-recycling platforms. FCL currently
performs capital recycling through its listed REITs which the
group can opportunistically divest mature yield properties to
free up capital and reinvest in other higher-ROE projects.
Valuation:
We have a BUY recommendation on FCL, with a target price of
S$2.36 based on a 30% discount to RNAV. We think that FCL
is attractive at 0.6x P/Bk NAV and believe that the stock is
trading at this level largely due to its tight liquidity constraints.
Key Risks to Our View:
Dependent on the outlook of Australia's real estate
market, currency outlook. The group derives an estimated
30% of PBIT and 35% from Australia which is dependent on
the real estate market and whose returns could be impacted
by the weakening AUD/SGD exchange rate.