FRASERS CENTREPOINT TRUST

FRASERS CENTREPOINT TRUST | ADD

TARGET PRICE: $2.41

JULY 25 CLOSE: $2.22

CGS-CIMB, July 24

Frasers Centrepoint Trust's (FCT) third-quarter performance was in line, with gross revenue up 10.9 per cent y-o-y to $48.3 million, thanks to higher portfolio occupancy and positive rental reversions.

Distribution income of $28.3 million (DPU: 3.1 cents) was 2.2 per cent higher y-o-y and represented 100 per cent payout ratio.

Topline growth was largely due to higher contributions from Northpoint North Wing (+35.9 per cent to $13 million), Causeway Point (+3.8 per cent to $21.8 million) and Changi City Point (+15.8 per cent to $6.5 million).

The trust registered a solid +5 per cent rental reversion this quarter on the renewal of 4 per cent of its net lettable area, mainly driven by better rental rates at Yew Tee Point and Changi City Point.

We expect the larger malls to continue driving growth with higher footfall, occupancy rate and rental reversions.

The trust is also well positioned for inorganic growth with a healthy balance sheet.

We leave our FY18-20F DPU estimates unchanged and maintain our target price of $2.41.

We continue to like FCT for its exposure to the more stable non-discretionary retail segment.

Upside risk could come from new acquisitions, while downside risk could come from slower-than-expected rental reversion.

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