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Tuesday, August 11, 2020

Frasers Logistics & Commercial Trust (previously Frasers Logistics & Industrial Trust) Analysis @ 11 August 2020

Basic Profile & Key Statistics

Frasers Logistics & Commercial Trust (FLCT), recently renamed from Frasers Logistics & Industrial Trust (FLT) after merger with Frasers Commercial Trust (FCOT) in April 2020. FLCT invests in Office, Logistics, and Industrial properties. The above sector breakdown is from the latest presentation, weighted by GRI.


Lease Profile

Occupancy is healthy at 97.2%. WALE is long at 5.2 years where the highest lease expiry within 5 years of 15.5% falls in year 2025. Weighted average land lease expiry is long at 89.54 years, this figure is estimated from latest presentation, by valuation.


Debt Profile

Gearing is healthy at 37.4%. Cost of debt is low at 2.1%. Fixed rate debt is low at 55.3% which is favorable in current low-interest environment. Unsecured debt is slightly low at 69.6%. Interest cover ratio is high at 6.7 times. WADE is long at 3.2 years where the highest debt maturity of 26.4% falls in FY2024.


Diversification Profile

Its top geographical and top properties are estimated from the latest presentation, weighted by property valuation. Its top tenant and top 10 tenants are weighted by GRI. All top geographical, top property, top tenant, and top 10 tenants contribution are low at 21.1%, 10.9%, 4.8%, and 24.1% respectively.


Key Financial Metrics


As FLCT do not provide detail financial statement at this quarter, therefore, besides property yield, all financial metrics are based on past 4 quarters of the pre-merger result. Property yield is moderate at 5.2%. Management fee is moderate in which unitholders receive S$ 7.58 for every dollar paid. Distribution on capital and distribution margin are high at 4.7% & 61.8% respectively. 2.7% of the distribution is from partial distribution of asset disposal.


Related Parties Shareholding

As compare to SREITs median level, sponsor and manager holding lesser stake while directors of REIT manager holding higher stake.


Trend

Note that the actual 3Q 2016 DPU is 1.84 for the period between 20 June 2016 to 30 September 2016, for a fair comparison, I have annualized it to 3 months period to around 1.658. DPU, NAV per Unit (pre-merger) and distribution margin are more or less the same for the past 4 years.


Relative Valuation

i) Average Dividend Yield  - Apply pre-merger latest 4 quarters DPU of 6.93 cents to average yield of 6.55% will get S$ 1.06

ii) Average Price/NAV - Average value is at 1.15, apply the latest NAV of S$1.04 will get S$ 1.20.


Author's Opinion

Favorable Less Favorable
Diversified Sector
WALE
Well Spread Lease Expiry
Cost of Debt
Interest Cover Ratio
WADE
Well Spread Debt Maturity
Top Geographical Contribution
Top Property Contribution
Top Tenant & Top 10 Tenants Contribution
Distribution on Capital (Pre-Merger)
Distribution Margin (Pre-Merger)

When I am compiling the above table, I am surprised that I couldn't find a significant less favorable point, I have double-checked yet I get the same result. However, since no financial statement is released, we have not enough information to evaluate the performance of post-merger. One thing to note for FCOT pre-merger, around 25 % of FCOT distribution is supported by partial distribution from asset disposal. This is applicable for FY2019 and 1Q FY2020, not sure whether it would impact post-merger DPU. Nonetheless, FLCT is currently in STI reserve list, with its market cap and price movement, it has high potential to be included in STI in the near term.


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

2 comments:

  1. NAVs seems to be stable or increasing during this COVID period..

    ReplyDelete
  2. Nav increase after merger, pre covid time not much change

    ReplyDelete