Frasers Centrepoint Trust (FCT) reported its 2QFY19 results which came in within our expectations. Gross revenue and NPI rose 2.3% and 4.8% YoY to S$49.7m and S$36.4m, respectively. All its malls recorded higher NPI, with the exception of Bedok Point (BP), which was unchanged.

DPU inched up 1.2% YoY to 3.14 S cents, as management released S$350k (0.037 S cents) from its retained amount from prior year, versus S$548k which was retained in 2QFY18.

For 1HFY19, FCT’s NPI increased 3.6% to S$71.8m and this formed 49.7% of our FY19 forecast. DPU of 6.157 S cents represented growth of 0.9%, and accounted for 50.4% of our full-year projection.

Operationally, FCT achieved positive rental reversions of 2.0% in 2QFY19 (1HFY19: +5.4%). All malls recorded higher rental uplifts, except Changi City Point, which registered rental reversions of -5.0%. Portfolio occupancy came off marginally by 0.4 ppt to 96.0%.

Shopper traffic for FCT’s portfolio rose 2.4%, but tenants’ sales declined 1.3% (period from Dec 2018 to Feb 2019) and this was attributed largely to transitional vacancies at Causeway Point, including the temporary closure of one of its food courts for renovation.

We maintain BUY on FCT but our S$2.50 fair value estimate is under review pending an analyst briefing.

Source: OCBC Research - 24 Apr 2019