Fraser Property (former Fraser Centrepoint)

[winston]

not vested

Residential earnings volatility

FCL’s 2QFY15 results were broadly in line with expectations, as 1HFY15 net profit made up 42% of our full-year forecast.

Star performers were the commercial and hospitality divisions, which reported higher earnings thanks to organic growth and new acquisitions.

Looking forward, we anticipate that residential contributions will be boosted by the strong pipeline of unbilled revenue, while the recurring income from REITs should fill the
income vacuum due to the Centrepoint AEI.

We tweak our FY15-17 EPS forecasts up marginally by 1.0-1.7% but maintain our Add rating and target price of S$2.02.

Capital recycling and higher free float remain the key catalysts

Source: CIMB

[winston]

not vested

2Q15 results for Frasers Centrepoint Ltd was in line with expectations.

A 2.4 scts interim dividend was declared.

FCL has existing capital recycling platforms in its listed REITs that are trading well and can potentially acquire stabilized assets from FCL, freeing up capital to invest in other higher ROE development projects.

We recommend BUY on FCL, with a target price of S$2.36 based on a 30% discount to RNAV.

We think that FCL is attractive at 0.7x P/Bk NAV and believe that the stock is trading at this level largely due to its tight liquidity constraints.

Source: DBS

[winston]

not vested

Frasers Centrepoint Ltd: BUY S$1.835; FCL SP

Boosted by gains;
Price Target : S$ 2.36

• 2Q15 results in line; 2.4 Scts interim dividend declared
• Strong income visibility from locked in sales from development projects across Singapore, China and Australia
• Re-cycling capital through proposed sale of 357 Collins Street to Frasers Commercial Trust to unlock value
• Maintain BUY, TP S$2.36

Highlights


2Q15 results in line

· Frasers Centrepoint Limited (FCL) reported a 14% rise in PBIT to S$197.9m, mainly driven by gains recognised on sale of Crosspoint in Beijing. Topline remained stable due to increased income from Australand

Property Group and an an expanded hospitality portfolio which offset a dip in development revenue from Singapore. 2Q15 PATMI doubled to S$143.0m, largely due to revaluation gains on its acquisition of a 50% interest in Capri by Fraser Changi City. Interim DPS was 2.4 Scts, in line with last year.

Recurring revenues continue to strengthen

· We see continued strength from its Commercial Properties (+6% y-o-y), supported by higher operating results from its malls and Hospitality segments (>100% y-o-y) mainly due to inclusion of six hotels from Frasers Hospitality Trust. This more than offset the drop in development revenues due to tapering of recognised profits in Singapore and UK.

Australand’s contribution also dipped due to a drop in revenue contribution from One Central Park and Parkland, but PBIT increased due to higher performance for its investment properties.


Balance sheet remains strong

· Debt/equity ratio declined marginally to 0.85x after accounting for new issuance of perpetuals (S$700m). Debt maturity profile remains long at 3.2 years with average cost of debt low at 2.9%.


Outlook

Locked-in unrecognized revenues of S$3.9bn

Sales momentum across its major markets remained stable and the group has locked in close to c.S$3.6bn in sales, which FCL is expected to recognise in the coming years.

These are from its its development projects in Singapore (S$1.5bn), China (S$0.6bn) and S$1.8bn from its residential development pipeline in Australia, underpinning strong income visibility in the medium term.

Major project launches in the coming year include Northpark Residences in Singapore, and in Australia, close to 1,500 units are planned to be released over FY15.


Targeting to derive 59% of its income base from recurring revenues

· 59% of FCL’s revenues is recurring, with a longer term target of 60%-70%.

Looking ahead, we see growing income from the completions of Punggol Point (retail), Northpoint City (retail) and Frasers Towers (commercial), which will boost its earnings further while Centerpoint Mall is expected to undergo a S$50m make-over to boost traffic and revenues post completion in 2H16. Frasers Hospitality is also expected to see its footprint expand to 30,000 managed units by 2019.


Existing capital recycling platforms

· FCL has existing capital recycling platforms in its listed REITs Frasers Centrepoint Trust, Frasers Commercial Trust and Frasers Hospitality Trusts which can potentially acquire stabilised assets from FCL, freeing up capital to invest in other higher ROE development projects.

The group has recently proposed the sale of 357 Collins Street to Frasers Commercial Trust, a demonstration of its re-cycling capaibility.


Valuation

We recommend BUY on FCL, with a target price of S$2.36 based on a 30% discount to RNAV.

We think that FCL is attractive at 0.7x P/Bk NAV and believe that the stock is trading at this level largely due to its tight liquidity constraints.


Risks

Small free float
· The stock has low free float with 87.9% of the company held by major shareholders TCC Group and Thai Beverage, thus leading to low liquidity.


Currency risk
The group derives an estimated 30% of PBIT and 35% from Australia and could be impacted by the weakening AUDSGD exchange rate.


Source: DBS

[winston]

not vested

Fraser Centrepoint Ltd (TQ5.SG) (BUY, TP $2.36) has good brand visibility and strong market niche in core markets in Singapore, China and Australia.

59% of its revenue is recurring, with a longer term target of 60% - 70%.

It enjoys strong income visibility from locked-in sales from development projects, with 15% of its assets in China.

With a stable of listed REITs which are trading at/above NAVs, we believe that its asset recycling strategy will be a key driver for NAV growth.

The group has a good portfolio of stabilised assets in hospitality, office and retail sectors which can be sold to its REITs.

The group has proposed the sale of 357 Collins Street to Frasers Commercial Trust.

Stock is undervalued, trading at 0.7x P/BV.

Source: Barron's Asia

[winston]

not vested

Frasers Centrepoint Ltd ($1.80, up 1.5 cent)’s wholly owned subsidiary, Australand has secured supply chain company - CEVA Logistics as a tenant for its 90,000 sqm campus-style warehouse and office facility at its West Park Industrial Estate.

The Ceva Logistics deal, one of the largest in Australia in years, takes the total industrial space transacted by Australand in Melbourne over the last six months to around 200,000 sqm, equaling to about $200 mln in value.

The new facility, which only recently started construction, is expected to be completed in mid 2016. It will be the centrepiece of CEVA’s growth plans in Australia and New Zealand with an end value of over $80 mln and CEVA has committed to an initial 10 year lease over the site.

Given its strategic location, the new office and warehouse will enable CEVA customers to benefit from excellent access to Melbourne’s road and rail network, the Port of Melbourne and Melbourne International Airport.

Looking ahead, leasing demand should remain resilient underpinned by the current economic environment and the shortage of quality industrial facilities available at short notice, particularly in west Melbourne.

We note that Australand has also secured a number of significant deals with some of Australia’s largest industrial occupiers in Melbourne, which has supported strong activity in its estates.

CEVA’s commitment represents the culmination of an active few months for Australand and the West Park estate, where Australand has just converted a 14,330 sqm speculative facility for long term customer Schenker in a deal valued at $14.3 mln. In addition, the company will continue to employ its speculative strategy where appropriate by leveraging on its unique benefit of an industrial land bank focused in Melbourne’s key industrial sub-markets.

Meanwhile, management has noticed the pre-lease market is beginning to unlock again amid signs that leasing activity has picked up and occupiers are willing and able to forecast their accommodation needs out a bit further.

Despite elevated incentives, the Melbourne industrial market still remain the most affordable market in Australia, 20-30% cheaper than the other capital cities.

The relative affordability of quality industrial space in Melbourne continues to attract a broad array of international logistics and domestic industrial occupiers alike.

Australand has a strong market position in Melbourne particularly focused in the west and south east, and it is also well-positioned with its land banks to convert new demand as it emerges.

Trading at 0.8x P/B coupled with yield of 4.8%, we continue to maintain our Buy rating on FCL.

Source: Lim & Tan

[winston]

not vested

Our visit to Frasers Australand’s projects in Sydney and Melbourne and our meeting with senior management, reaffirmed our view that this strategic acquisition will provide the group with a deeper recurrent income base as well as development growth via a large residential landbank and strong market positioning within the industrial sector.

This enables FCL to achieve both scale and depth in Australia.

We continue to like FCL for its attractive valuations and maintain an Add rating with a target price of S$2.02 (30% discount to RNAV).

The key share price catalyst would be an increase in its low free float.

Source: CIMB

[winston]

not vested

Singapore's Frasers Centrepoint buys UK hotel firm for $572 million

Singapore-listed Frasers Centrepoint Ltd (FRCT.SI) said on Wednesday one of its units has bought a UK boutique hotel operator for 363.4 million pounds ($571.8 million), to boost its hospitality business.

Property firm Frasers Centrepoint took over MHDV Holdings (UK) Ltd, which owns 29 upscale boutique hotels in 25 cities in the United Kingdom, from an affiliate of KSL Capital Partners, LLC, a U.S. private equity firm, Frasers Centrepoint said.

Barclays Bank PLC and Standard Chartered Bank are the joint financial advisers to Frasers Centrepoint for this acquisition.

Source: Reuters

[winston]

not vested

Growing footprint in UK

FCL has purchased a portfolio of Malmaison and Hotel du Vin hotels in the UK for c.£364m (S$760m).

This would double the group’s European footprint to 4,000 rooms and boost its hospitality exposure to 13% of total assets.

We see this acquisition as strategic as it would expand FCL’s reach into the UK tourist market as well as the premium tourist segment with potential to tap new
markets in Asia as well as new clientele networks.

We estimate the purchase could boost FCL’s earnings by a marginal 1-5% with further upside potential from a visible acquisition pipeline.

Maintain Add with an unchanged target price of S$2.02 (30% discount to RNAV).

Source: CIMB

https://brokingrfs.cimb.com/yLxjDcsRiW2 ... k6hzM1.pdf

[winston]

vested

Frasers Centrepoint Ltd
Robust 3Q showing

FCL SP / FRCT.SI | ADD - Maintained | S$1.67 tp:S$2.02
Mkt.Cap:US$3,493.00m | Avg.Daily Vol:US$0.44m | Free Float:12.00%


FCL’s results were within expectations, with 3Q core net profit making up 27% of our full-year estimate and 9M making up 72%. The profit uplift came from Frasers Australand, the hospitality segment and residential development operations.

Earnings visibility remains robust, with a sizeable S$3.5bn worth of locked-in unrecognised residential billings and a strong rental income base.

We keep our current profit and RNAV projections unchanged. Maintain Add and our target price of S$2.02 (pegged to a 30% discount to RNAV).


Strong set of 3QFY15 results

FCL reported a 91% jump in net profit to S$181.4m on a 157% surge in revenue to S$1.01bn. This brings 9MFY15 earnings to S$426.4m or 72% of our full-year forecast.

The star performers were Frasers Australand, which benefited from the inclusion of income from Australand, the hospitality segment, with income from newly-purchased hotels as well as the development property business due to income recognition from completed projects, such as Twin Waterfalls EC in Singapore and Gemdale Megacity P2 in China.

This more than offset the dip in rentals from The Centrepoint (undergoing AEI) and higher interest expense.


High recurrent base, visibility from development pipeline

In addition to the strong and growing recurrent income base, which makes up 50-60% of PBIT (medium-term target 70%), it has a further S$3.5bn worth of residential billings that could be recognised over the next few years.

Overseas development earnings visibility remains clear, thanks to sizeable land bank in Australia and China. With good sales at North Park Residences and only one remaining land parcel in Singapore, it aims to replenish land bank to maintain a 1,000-1,500 units of inventory in the latter.

Gearing of 0.91x as at Jun 15 (slightly lower post recent sale of Sofitel Wentworth Hotel and 357 Collins St) appears to be relatively higher than peers. As such, we anticipate more recycling of capital from its commercial, retail and hospitality portfolio in the medium term.

Besides the purchase of the Malmaison and Hotel du Vin portfolio in UK, the upcoming completion of Waterway Point Mall and AEI at The Centrepoint should enhance the size and value of its investment property portfolio.


Maintain Add call

We retain our FY15-17 numbers and RNAV estimate of S$2.88/share.

Potential catalysts for stock price performance include its increasing free float.


Source: CIMB

[winston]

vested

Frasers Centrepoint Ltd (ADD, tp:S$2.02) - Robust 3Q showing

FCL’s results were within expectations, with 3Q core net profit making up 27% of our full-year estimate and 9M making up 72%.

The profit uplift came from Frasers Australand, the hospitality segment and residential development operations.

Earnings visibility remains robust, with a sizeable S$3.5bn worth of locked-in unrecognised residential billings and a strong rental income base.

We keep our current profit and RNAV projections unchanged.

Maintain Add and our target price of S$2.02 (pegged to a 30% discount to RNAV).

Source: CIMB