SINGAPORE (April 4): The gains for Frasers Centrepoint Limited (FCL) from its role in the massive “One Bangkok” mixed-development in the heart of the Thai capital are likely to be more intangible, according to DBS Group Research.
“While the immediate financial impact may not be huge in the near-term, we believe the successful execution of this project will further elevate FCL’s reputation and brand name as a renowned property developer both in Thailand and globally,” says DBS lead analyst Rachel Tan in a Tuesday report.
Frasers Centrepoint subsidiary, Frasers Property Holdings (Thailand), on March 31 entered into a 20:80 joint-venture agreement with TCC Assets to establish a JV company, One Bangkok Holdings (OBH).
OBH will undertake the “largest private sector property development initiative undertaken in Thailand” – a mixed-development with gross floor area of 1.83 million sqm, comprising retail, office towers, residences, hotels and serviced apartments.
(See also: Frasers Centrepoint unit in $1.4 bil JV with TCC Assets to build Bangkok development)
“This is a rare opportunity and entrusted by the Crown Property Bureau to turn the prime plot of land into a masterpiece in the heart of Bangkok,” says Tan.
Located next to Lumpini Park, where the popular Suan Lum Night Bazaar used to sit, One Bangkok’s total development cost is estimated at over 120 billion baht ($5 billion).
According to Tan, Frasers Centrepoint’s capital commitment is up to 7.1 billion baht out of a total capital commitment of 35.8 billion baht, to be injected over the period of the development.
“The remaining 70% of the estimated development cost will likely be debt funded,” says Tan.
The project is expected to unfold progressively from 2021 onwards.
“We believe this is a testament of FCL’s capabilities as an established master planner / developer, and skillsets,” says Tan, “following its successful Central Park development in Sydney and various mixed-development projects in Singapore.”
DBS is keeping its “buy” recommendation on FCL, with an unchanged target price of $2.00.
Tan says this is due to FCL’s attractive valuation at 0.7x price to net asset value (P/NAV). In addition, she notes that FCL offers one of the highest dividend yields among developers at close to 5%.
As at 1.12pm, shares of Frasers Centrepoint are trading 3.5 cents higher at $1.78.
