SINGAPORE (Mar 16): Frasers Centrepoint Trust (FCT) has not been spared by the Covid-19 pandemic, but OCBC Investment Research remains optimistic that the real estate investment trust will “remain resilient”.
Over less than two weeks, the counter has fallen more 24% from its recent peak closing price of $3.04 on March 5.
“[FCT’s] share price has taken a beating, in line with overall weak market conditions,” says OCBC’s research team in a March 16 report.
The research team notes that shopper traffic at FCT’s portfolio if suburban malls in Singapore fell by up to 20% in the first two weeks of February.
While footfall at its malls has since improved progressively, its tenants’ sales have seen a great impact.
However, OCBC says the suburban malls are “typically more defensive and resilient”. This is especially true as FCT’s malls enjoy “dominant positions in their respective catchment areas”.
OCBC is keeping its “buy” call on FCT, and raising its fair value estimate to $3.07, from $2.97 previously.
Notably, the research house highlights that FCT has established an “enviable track record” of delivering positive distribution per unit (DPU) growth every year since its listing in July 2006.
So far, DPU has grown at a comping annual growth rate (CAGR) of 5.5%.
“We look back at FCT’s performance during the last Global Financial Crisis, and find solace that its DPU still increased by 11.3% in FY2008 ended September and a further 3.0% in FY2009,” says OCBC.
The research house believes that retail conditions will remain challenging for FCT given the uncertainty over the evolving Covid-19 situation.
“We expect FCT to stand out with its defensive attributes, but it will not be immune from these challenging conditions,” OCBC says. “As such, we lower our FY2020 and FY2021 DPU forecasts by 1.1% and 0.8%, respectively, due to more conservative rental assumptions.”
Units in FCT closed 9.8% lower, or down 25 cents, at $2.31 on Monday.
