Frasers Logistics & Industrial Trust (FLT) reported its 4QFY18 results which met our expectations. Gross revenue and NPI surged 43.2% and 55.5% YoY to A$60.4m and A$50.2m, respectively.

Adjusted NPI (excluding straightlining adjustments) jumped 52.6% YoY to A$49.3m. This was driven largely by contribution from acquisitions.

DPU in SGD terms grew 0.6% YoY to 1.78 S cents, boosted by a A$2m distribution from divestment gains, but partially offset by a weaker currency hedge rate of A$1: S$1.0011 which FLT entered into (4QFY17: A$1: S$1.016) and an enlarged unit base from its equity fund raising exercise.

For FY18, FLT’s adjusted NPI increased 24.6% to A$155.4m, while DPU of 7.19 S cents represented an improvement of 2.6% and was 0.5% higher than our FY18 forecast of 7.15 S cents.

Overall portfolio metrics remained largely healthy, with high occupancy of 99.6% and long WALE of 6.87 years. Only 2.5% of its gross rental income is up for renewal in FY19. However, rental reversions in 4QFY18 came in at -5.1%, such that FY18’s rental reversions were -3.2%.

Pending an analyst conference call, we maintain our BUY rating but our S$1.19 fair value estimate is under review.

Source: OCBC Research - 7 Nov 2018