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PHILLIP SECURITIES |
PHILLIP SECURITIES |
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Frasers Centrepoint Trust Low occupancy cost to drive rental reversion
▪ No financials were provided in the 3Q24 business update. Retail portfolio occupancy was 99.7%, with each retail mall having an occupancy rate of over 99%. ▪ 3Q24 shopper traffic and tenants’ sales were up 4.1% and 0.7%, respectively. Financial year-to-date tenants’ sales are 20% above pre-COVID 2019 levels. The AEI at Tampines 1 is expected to be completed by September 2024, with 100% committed occupancy. ▪ Maintain ACCUMULATE, with an unchanged DDM TP of S$2.38. We expect 7% positive rental reversion for FY24e supported by the low occupancy cost of under 16% that averaged 17% pre-pandemic. Share price catalysts include more accretive acquisitions and lower-than-expected interest costs. The share trades at an FY24e DPU yield of 5.5%. There is no change in our estimates.
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OUE REIT Sound operational performance dragged by financing cost
• Gross revenue for 1H24 met expectations, climbing 5.7% YoY to S$146.7mn. The growth was underpinned by a robust rental reversion (office + 11.7% and retail +28.4%) and hospitality segment which saw a revenue increase of 12.9% YoY to S$51.7mn. • Despite the sound operational performance, with NPI inching up by 1.6% YoY and forming 48% of our FY24e estimates, DPU declined 11.4% YoY at 46% of our FY24e forecast, landing at S$0.93 cents. This weakness was attributed to the rising financing costs (+18.5% YoY), higher retention of earnings for working capital (+67% YoY to S$5mn), and the payment of 100% base management fees in cash (65% in 1H23).
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CGS CIMB |
CGS CIMB |
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Mapletree Logistics Trust Weathering challenges in China
■ 1QFY3/25 DPU of 2.068 Scts is in line, at 24.2% of our FY25F forecast ■ High portfolio occupancy amid positive rental reversions in 1QFY25 ■ Maintain Add with a lower TP of S$1.63Mapletree Logistics Trust Weathering challenges in China ■ 1QFY3/25 DPU of 2.068 Scts is in line, at 24.2% of our FY25F forecast ■ High portfolio occupancy amid positive rental reversions in 1QFY25 ■ Maintain Add with a lower TP of S$1.63
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Frasers Centrepoint Trust More organic growth to come
■ High occupancy maintained in 3Q, at 99.6%. Positive reversions likely to continue in FY25F, supported by 15.6% occupancy cost (historical: 16-19%). ■ Awaiting more value unlocking from tax transparency and AEI at NEX. ■ Reiterate Add in view of FCT’s organic growth potential, driven by active asset management, and resilient demand for prime suburban mall space.
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| CGS CIMB | LIM & TAN |
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REIT MAS proposes ICR floor for REITs
■ MAS has proposed to impose minimum ICR requirement of 1.5x and leverage ratio to up to 50% for SREITs. ■ We see this as a positive move for SREITs that can help them to maintain prudent capital management strategies. ■ Maintain sector Overweight. Preferred picks: CLAR, FLT.
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CapitaLand Ascott Trust / CLAS ($0.90, down 0.01) increased its 1H 2024 gross profi t by 12% year-on-year (y-o-y) to S$172.9 million. Revenue also rose by 11% y-o-y, reaching S$386.4 million. The increase was mainly on the back of sustained lodging demand and stronger operating performance. On a same-store basis, gross profi t and revenue increased by 3% and 4% y-o-y respectively. As demand for international travel continued to increase, CLAS’ revenue per available unit for 1H 2024 grew 5% to S$145, compared to 1H 2023. On a quarterly basis, CLAS’ REVPAU for 2Q 2024 went up by 4% y-o-y to S$155. This exceeds pre-pandemic levels, at 102% of 2Q 2019 pro forma REVPAU. All key markets also performed at or above pre-pandemic levels on a samestore basis. The increase in REVPAU was a result of higher room rates, with key markets Japan and United States of America (USA) leading the growth.
At 90 cents, CLAS is capitalized at $3.4bln and trades at 0.8x book and 5.6% forward yield. Consensus target price of $1.21, implies a potential 1 year return of 34%. We maintain an “Accumulate” rating on CLAS given that it’s a stable blue-chip REIT that will benefi t from the lower interest rate ahead as well as reopening of the global tourism markets.
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