Frasers Centrepoint Trust (FCT) reported an inline set of 4QFY18 results this morning. Gross revenue rose 0.5% YoY to S$48.5m, but NPI was down 4.9% to S$32.9m due to higher property tax for Northpoint City North Wing (NPNW) and increases in utilities tariff rates, professional fees and more ad-hoc repair and replacement works. Correspondingly, DPU fell by 3.6% YoY to 2.862 S cents.

For the full-year, FCT’s gross revenue grew 6.5% to S$193.3m; NPI increased 5.9% to S$137.2m and formed 98.5% of our forecast. DPU of 12.02 S cents represented growth of 1.0%, and constituted 98.7% of our FY18 projection.

Operationally, FCT’s portfolio occupancy improved 0.7 ppt QoQ to 94.7%, as all its malls except Causeway Point registered higher occupancy.

Overall rental reversions came in at only a mild +0.2% in 4QFY18, but the larger malls continued to showcase positive rental uplifts, although this was partially offset by the smaller malls such as Bedok Point and YewTee Point. Rental reversions were 3.2% higher for the full-year (FY17: 5.1%).

Northpoint City’s shopper traffic (includes both North Wing and South Wing as it is hard to segregate) jumped 36.5% YoY following the completion of its AEI. Excluding this, FCT’s portfolio footfall still rose a commendable 5.0%. Tenants’ sales (JunAug 2018) grew 3.6% YoY.

We will provide more updates after the analyst briefing. Maintain BUY, but we will be reviewing our S$2.49 fair value estimate.

Source: OCBC Research - 24 Oct 2018