12-08-2014, 10:30 AM
DBS Vickers maintain BUY:
Charging ahead
3Q14 PATMI of S$109.2m in line with expectations
Australand take-over ongoing; proceeds from listing of
FHT to improve balance sheet metrics
Maintain BUY with TP S$2.08
Highlights
3Q14 results in line with expectations. Frasers Centrepoint
Limited (FCL) delivered a 3Q14 PATMI of S$109.2m, which was 59%
lower y-o-y. The main reason was the revaluation exercise
undertaken prior to the listing of FCL back in Jun’13. Stripping out
close to S$204m in revaluation gains in 3Q13, on a comparative
basis, core 3Q14 PATMI would have risen by 77% y-o-y to
S$120.0m. FCL’s balance sheet metrics remained stable with Net
Debt/Equity at 0.5x for the quarter.
Portfolio highlights. Revenues and operating profits jumped 41%
and 68% y-o-y to S$575.4m and S$147.6m respectively. The
improved operational performance was due to FCL’s share of
proceeds from the divestment of Changi City Point to FCT, revenue
recognition from the completion of Chengdu Logistics Hub Phase 2
in China and sale of completed units at One Central Park and Putney
Hill in Australia, and Riverside Quarter in the UK. The group’s
hospitality division also saw a 17% y-o-y jump in revenues to
S$53.5m, on the back of better occupancies achieved. Its other
business divisions – the investment properties and REITs remained
fairly stable, offering consistent cashflows to the group.
Our View
Unrecognised revenues from property development close to
S$2.56bn. YTD, the group has sold c.410 and 380 residential units
YTD in Singapore and in Australia respectively. Locked-in and
unrecognised revenues in these two countries are c.S$1.9bn and
S$0.6bn respectively, which is expected to be recognised
progressively in the coming years. The group has also sold a majority
of units launched in China, achieving close to over 1,500 in sales.
Proceeds from listing of FHT to further strengthen balance
sheet metrics. In line with its capital recycling strategy, FCL is
expected to reap close to S$654.7m in proceeds through the
divestment of six serviced residences following the successful listing
of Frasers Hospitality Trust (FHT). Assuming that the proceeds are
fully utilised towards repayment of debt, debt/equity is expected to
further improve to c.0.4x.
Australand completion. FCL has garnered close to 56.8% in
acceptance for its take-over offer for Australand and the offer was
declared unconditional on 7th Aug’14. The offer is expected to close
on 21st Aug’14 and the intention of the group is to eventually delist
Australand.
Recommendation
BUY, S$2.08 TP. Valuations remain attractive at 0.9x P/BkNAV.
Maintain BUY with a target price at S$2.08 based on 30% discount
to RNAV.
Charging ahead
3Q14 PATMI of S$109.2m in line with expectations
Australand take-over ongoing; proceeds from listing of
FHT to improve balance sheet metrics
Maintain BUY with TP S$2.08
Highlights
3Q14 results in line with expectations. Frasers Centrepoint
Limited (FCL) delivered a 3Q14 PATMI of S$109.2m, which was 59%
lower y-o-y. The main reason was the revaluation exercise
undertaken prior to the listing of FCL back in Jun’13. Stripping out
close to S$204m in revaluation gains in 3Q13, on a comparative
basis, core 3Q14 PATMI would have risen by 77% y-o-y to
S$120.0m. FCL’s balance sheet metrics remained stable with Net
Debt/Equity at 0.5x for the quarter.
Portfolio highlights. Revenues and operating profits jumped 41%
and 68% y-o-y to S$575.4m and S$147.6m respectively. The
improved operational performance was due to FCL’s share of
proceeds from the divestment of Changi City Point to FCT, revenue
recognition from the completion of Chengdu Logistics Hub Phase 2
in China and sale of completed units at One Central Park and Putney
Hill in Australia, and Riverside Quarter in the UK. The group’s
hospitality division also saw a 17% y-o-y jump in revenues to
S$53.5m, on the back of better occupancies achieved. Its other
business divisions – the investment properties and REITs remained
fairly stable, offering consistent cashflows to the group.
Our View
Unrecognised revenues from property development close to
S$2.56bn. YTD, the group has sold c.410 and 380 residential units
YTD in Singapore and in Australia respectively. Locked-in and
unrecognised revenues in these two countries are c.S$1.9bn and
S$0.6bn respectively, which is expected to be recognised
progressively in the coming years. The group has also sold a majority
of units launched in China, achieving close to over 1,500 in sales.
Proceeds from listing of FHT to further strengthen balance
sheet metrics. In line with its capital recycling strategy, FCL is
expected to reap close to S$654.7m in proceeds through the
divestment of six serviced residences following the successful listing
of Frasers Hospitality Trust (FHT). Assuming that the proceeds are
fully utilised towards repayment of debt, debt/equity is expected to
further improve to c.0.4x.
Australand completion. FCL has garnered close to 56.8% in
acceptance for its take-over offer for Australand and the offer was
declared unconditional on 7th Aug’14. The offer is expected to close
on 21st Aug’14 and the intention of the group is to eventually delist
Australand.
Recommendation
BUY, S$2.08 TP. Valuations remain attractive at 0.9x P/BkNAV.
Maintain BUY with a target price at S$2.08 based on 30% discount
to RNAV.