Analyst Jonathan Koh of UOB Kay Hian maintained a Buy rating on Frasers Centrepoint (FRZCF – Research Report), reducing the price target to S$2.71.
Jonathan Koh has given his Buy rating due to a combination of factors surrounding the performance of Frasers Centrepoint Trust (FCT). Despite facing some revenue declines due to divestments and ongoing asset enhancement initiatives, the underlying growth of FCT’s gross revenue and net property income, when adjusted for these factors, actually showed an increase year-on-year. Additionally, Koh recognizes the strong demand for FCT’s retail spaces, which is evidenced by high occupancy rates across their portfolio, with most properties being fully occupied or above 99% occupancy.
Koh also notes the significant increase in shopper traffic and tenant sales, which have surpassed pre-pandemic levels by a considerable margin. This uptick in consumer activity, coupled with strategic enhancements at key properties and robust positive rental reversion rates, suggests a promising outlook for FCT’s suburban malls. The defensive distribution yield projected for FY25 further enhances FCT’s attractiveness to investors, supporting Koh’s Buy recommendation and the target price set for the stock.
In another report released today, DBS also assigned a Buy rating to the stock with a S$2.70 price target.
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Frasers Centrepoint (FRZCF) Company Description:
Frasers Centrepoint Trust, or FCT, is a real estate investment trust listed on the Singapore Exchange focusing on suburban retail properties. The trust owns eight properties in Singapore (of which only one is not wholly owned), with a valuation of more than SGD 3 billion. Total net leasable area amounts to more than 1.2 million square feet, representing more than 4% of all shopping mall floor space in the city-state. FCT also holds around 31% stake in Malaysia listed Hektar Real Estate Investment Trust and around 25% stake in PGIM Real Estate AsiaRetail Fund.
