Frasers Property (formerly: Frasers Cpt (FCL))

[greengiraffe]

Macquarie maintain OUTPERFORM:

Frasers Centrepoint Ltd
Strong 3QFY15
Event
 After market close, Frasers Centrepoint Limited (FCL) reported 3QFY15 clean
net profit, ex. perps, of S$165m (+74%YoY,+86%QoQ). The results were well
within our estimates of S$160m. Reiterate Outperform.
Impact
 Results highlight. The bulk of the earnings improvement was driven by
FCL’s development business, which came in at S$183m (+137% QoQ,
+207% YoY) due to project completions in Singapore (Waterfalls EC) and
strong China resi sales. Frasers Australand disappointed slightly against our
numbers due to lower-than-expected resi revenue recognition. The rest of the
businesses (Commercial and Hospitality) were broadly within our
expectations.
 9MFY15 residential sales on track. In Singapore, 680 units were pre-sold
(70% of FY16 target). North Park Residence achieved ~80% sell-through,
which is commendable given the current subdued market. China achieved
1,700 of pre-sales, reaching our FY16 target. Frasers Australand achieved
2,335 units (75% of FY16 target). FCL now has S$3.5bn of unrecognised
revenues from residential presales.
 Steady performance from investment properties and REITs (40% of
RNAV). FCL’s FCT and FCOT saw good rent reversion (5-7%) and steady
occupancy (>95%). Australand’s industrial portfolio improved occupancy this
quarter +2.8ppt to 96.2.
 FCL will host a post results briefing call tomorrow at 10am SG time.
Earnings and target price revision
 No change.
Price catalyst
 12-month price target: S$2.24 based on a Sum of Parts methodology.
 Catalyst: Improvement in free float.
Action and recommendation
 Reiterate Outperform. FCL has once again demonstrated good resi sell
through rates across its key markets. As highlighted in our initiation report, the
gap to RNAV should close.
 FCL shares are cheap, trading at a 55% discount to RNAV (ex investment
properties and REITs) and 0.76x P/B (ex perps) backed by 7.5% ROE (MQ
FY15E). We highlight that 9MFY15 annualised ROE is already tracking at a
higher 8.2%.