DBS analyst Geraldine Wong maintained a Buy rating on Frasers Centrepoint on January 23 and set a price target of S$2.75.
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Geraldine Wong has given his Buy rating due to a combination of factors that highlight Frasers Centrepoint Trust’s resilient operations and income visibility. Portfolio occupancy has almost fully recovered to near-full levels following the successful leasing of former cinema spaces at Causeway Point and Century Square, which reinforces the appeal of its malls to quality tenants. At the same time, both shopper footfall and tenant sales are trending higher year-on-year, supported by a healthy domestic retail backdrop, while funding costs remain stable due to a high proportion of fixed-rate debt. The balance sheet is broadly steady, with only a modest uptick in leverage largely attributable to ongoing asset enhancement spending.
Geraldine Wong’s rating is based on the view that active asset enhancement initiatives are a key driver of medium-term growth for the trust. Hougang Mall’s refurbishment is progressing well, with more than four-fifths of the space already pre-committed and tracking towards management’s targeted return on investment, helped by the introduction of popular new dining concepts. Looking ahead, the planned enhancement of NEX, which will convert underutilised carpark space into additional retail area, is expected to expand net lettable area and support a re-rating of the asset’s value. While the upcoming Johor Bahru–Singapore Rapid Transit System could pose some competitive pressure on malls in the northern region, she believes Frasers Centrepoint Trust remains a defensive retail REIT underpinned by solid tenant performance, manageable occupancy costs, and AEI-led rental growth, justifying the maintained Buy recommendation and target price of SGD 2.75.
FRZCF’s price has also changed slightly for the past six months – from S$2.210 to S$2.260, which is a 2.26% increase.