SCCM Asia Research said it was tempering its expectations for Fraser Centrepoint Trust in fiscal 2022, citing the potential for Covid-related measures to be extended and the risk of further negative rental reversions.
Fiscal 2021 net property income and distribution per unit (DPU) met 94 percent and 96 percent, respectively, of forecasts, SCCM Asia Research, which publishes on Smartkarma, said in a note 2 November.
For the fiscal year ended 30 September, Frasers Centrepoint Trust reported net property income rose 122 percent on-year to S$246.57 million on gross revenue of S$341.15 million, up 108 percent on-year. The full-year DPU came in at 12.085 Singapore cents, up from 9.042 Singapore cents the previous year, the filing said.
Tenant sales over the July-to-September period came in at around 93 percent to 98 percent of pre-Covid levels, the trust said.
Portfolio occupancy was at 97.3 percent, up by 0.9 percentage point, the trust said. During the full year, 459 leases were renewed, with the retail portfolio’s rental reversion, on an incoming vs outgoing basis, was at minus 0.6 percent, the trust said.
SCCM Asia Research noted that despite September shopper traffic falling to only around 56 percent of pre-Covid levels amid additional social-distancing measures, tenants’ sales rose closer to pre-Covid levels.
But the note expressed some caution, citing the negative rental reversion, even as occupancy rose, as 554 leases are coming up in fiscal 2022, representing 38.7 percent of net lettable area.
“While management is sanguine on renewing these leases (c.25 percent de-risked as at October 2021), we have adopted a more conservative view after our site visits to the nine portfolio malls,” SCCM Asia Research said. “A key observation was the weakness in shopper traffic to secondary floors, attributable mainly to tenant mix. Further afield, map studies reveal that FCT’s suburban dominance could be challenged by upstarts across Woodlands, Hougang, Punggol, and Pasir Ris.”
In addition, SCCM Asia Research said it was lowering its expectations for a recovery spurt in fiscal 2022 due to “stubbornly high infection growth rates,” as well as the risk Covid-related restrictions could be extended for longer than the government’s March timeline.
The note said the DPU compound annual growth rate forecast for fiscal 2020-2025 was trimmed to 2.8 percent form 3.2 percent previously, and the analyst cut the target price to S$2.76 from S$2.89 previously.
But it kept a Buy call, saying resilient occupancy would support overall performance.
Units of Frasers Centrepoint Trust ended Friday down 0.42 percent at S$2.35.