• FLT's 3Q/9MFY9/18 DPU of 1.8/5.4 Scts was in line with expectations at 25%/75% of our FY18 forecasts.
• Portfolio occupancy was 99.3% while Australian rent reversion was almost flat in 3Q.
• Gearing increased to 36.3% post the European acquisition.
• Maintain ADD call and our target price of S$1.24.

3QFY18 Results Highlights

Frasers Logistics & Industrial Trust's 3QFY9/18 DPU of 1.8 Scts was 2.9% higher y-o-y, largely due to inorganic contributions from acquisitions in Australia and Europe but partly offset by an expansion in units base following a fund-raising exercise to purchase the European assets. 

Adjusted NPI increased by A$8.4m (+27.4%) y-o-y, with 60% of the increment coming from 5 weeks of contributions from the European portfolio, 29% from the 7 Australian properties acquired during Oct 17-May 18 and the balance from annual fixed escalations from the Australian portfolio. 

Distribution income grew a lower 22.4% y-o-y (vs NPI), partly hit by higher financing cost from the European transaction and higher effective tax rate.

Source: CGS-CIMB Research - 02 Aug 2018