Frasers Centrepoint Trust - RHB Invest 2023-10-26: Sharpening Its Operational Focus

• Frasers Centrepoint Trust (SGX:J69U)’s FY23 (Oct 2022 to Sep 2023) results came in slightly below expectations. Retail market conditions are showing a healthy improvement from steady income growth and tourist arrivals, and this has been reflected positively across the operational performance of its malls.
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• Frasers Centrepoint Trust remains a defensive safe haven but current yield spreads are not attractive.

2H23 and FY23 DPU dipped by 1% y-o-y

• Frasers Centrepoint Trust's 2H23 and FY23 DPU dipped by 1% y-o-y as top line growth was offset by interest costs which surged by 73% y-o-y (~S$34m higher in FY23). Its NPI margin (2H) declined to 70.4% (-0.5ppt y-o-y), driven by higher maintenance and utility expenses.
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• Frasers Centrepoint Trust's portfolio valuation remained stable, with no changes to cap rates and discount rates.
• Frasers Centrepoint Trust has recently refinanced its FY24 loans with a new 5-year floating loan post, of which nearly half of its debt will remain hedged. Average interest cost (FY24), as a result, is expected to rise to a low 4% (FY23: 3.8%).

Heathy improvement in operational metrics.

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Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2023-10-26 SGinvestors.io

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