Thursday, June 14, 2012

Frasers Commercial Trust: Making good progress (OCBC)

Frasers Commercial Trust (FCOT) has emerged as the top performer in the S-REIT space YTD given its expected improvement in operating performance and financial position. The acquisition of the remaining 50% stake in Caroline Chisholm Centre and asset enhancement initiative on China Square Central, for example, are expected to contribute positively to its DPU. We also see several positives from the proposed divestment of KeyPoint, which are derived from using the proceeds to pare down its borrowings. We continue to like FCOT for its growth potential, proactive management and respectable FY12F DPU yield of 7.3%. Amid the positive outlook, we expect FCOT’s performance to be sustained (valuations still undemanding at 0.7x P/B). We are currently holding off adjusting our estimates as the divestment of KeyPoint is subject to unitholders’ approval. Maintain BUY with unchanged fair value of S$0.97.

Outperformer in S-REIT space
Frasers Commercial Trust (FCOT) has emerged as the top performer in the S-REIT space YTD given its expected improvement in operating performance and financial position. The REIT’s acquisition of the remaining 50% stake in Caroline Chisholm Centre in Australia, which had been completed on 13 Apr, is expected to contribute positively to its DPU and strengthen its portfolio lease expiry profile. In mid-May, FCOT jointly announced the China Square Precinct Master Plan with Far East Organization and The Great Eastern Life Assurance, which will enhance the traffic and connectivity of the downtown heritage area, including China Square Central (CSC). This will likely enable FCOT to better position CSC for quality tenants and ultimately benefit from yield optimization, now that FCOT has taken over management of the asset following the expiry of master lease.

Divestment of KeyPoint a plus
FCOT had also announced the proposed sale of KeyPoint on 24 Apr, much to the market’s anticipation. The sales consideration was at S$360.0m and represents a 26.3% premium over the property’s latest valuation of S$285.0m (NPI yield at 3.11%). We see several positives from the divestment, especially when the proceeds are used to pare down its borrowings or even redeem its CPPUs (Convertible Perpetual Preferred Units). First, it is expected to alleviate the heat on its aggregate leverage (currently close to 40%), hence providing it with greater financial flexibility for future investment opportunities. Second, FCOT may be able to refinance its debts at more favourable terms, as its financial position is now stronger. Furthermore, interest expenses are likely lower from lower outstanding debts.

Maintain BUY
We continue to like FCOT for its growth potential, proactive management and respectable FY12F DPU yield of 7.3%. Amid the positive outlook, we expect FCOT’s performance to be sustained (valuations still undemanding at 0.7x P/B). We are currently holding off adjusting our estimates as the divestment of KeyPoint is subject to unitholders’ approval. Maintain BUY with unchanged fair value of S$0.97.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC Investment Research
Publish date: 13/06/12

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Warren E. Buffett(沃伦•巴菲特)
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别人贪婪时我恐惧, 别人恐惧时我贪婪
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做自己熟悉的事,等到发现大好机会才投钱下去

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“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

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高估期间, 卖对, 不卖也对, 买是错的。
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Tan Teng Boo


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合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
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1.有智慧,不如趁势
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成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
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