Frasers Logistics & Commercial Trust: Buy Rating Amid Strategic Growth and Short-term Challenges

In a report released yesterday, Lock Mun Yee from CGS-CIMB reiterated a Buy rating on Frasers Logistics & Commercial Trust (FRLOF – Research Report), with a price target of S$1.11.

Lock Mun Yee has given his Buy rating due to a combination of factors that highlight the potential for Frasers Logistics & Commercial Trust (FLCT) to deliver value despite some short-term challenges. The trust reported a year-on-year increase in revenue and net property income for the first half of the fiscal year 2025, driven by contributions from strategic acquisitions in Europe and Singapore. However, distribution income saw a decline due to higher interest and tax expenses, although this was partially offset by increased capital distributions.
Despite a slight dip in overall occupancy rates, the logistics and industrial segment remains nearly fully occupied, and rental reversions in this segment have been positive. The trust’s gearing level is healthy, and management is actively exploring growth opportunities through acquisitions and divestments to enhance long-term returns. Although the distribution per unit forecast has been adjusted downward, the projected dividend yield remains attractive, and the trust’s strong balance sheet supports its potential for inorganic growth. Key risks include the ability to secure accretive acquisitions and macroeconomic factors that could impact demand for its properties.

In another report released today, DBS also maintained a Buy rating on the stock with a S$1.05 price target.