Frasers Commercial Trust (FCOT) reported its 2QFY17 results this morning which met our expectations. Gross revenue and NPI grew 3.2% and 4.1% YoY to S$40.2m and S$30.0m, respectively, while DPU was up 2.4% to 2.51 S cents.

For 1HFY17, FCOT’s gross revenue and NPI both increased 1.7% to S$79.9m and S$59.2m, respectively, with the latter accounting for 50.1% of our forecast. DPU of 5.01 S cents represented marginal growth of 1.0% and formed 50.7% of our full-year projection.

On a portfolio basis, FCOT’s committed occupancy slipped 1.2 ppt QoQ to 91.8%, as higher occupancy in Australia was offset by increased vacancies in Singapore. Management achieved average positive rental reversions of 3.6% in 2QFY17.

We will provide more details after the analyst briefing. For now, we have a BUY rating and S$1.39 fair value estimate on FCOT.

Source: OCBC Research - 21 Apr 2017