Frasers Centrepoint Trust another new high

4QFY12 DPU better than expected. Frasers Centrepoint Trust (FCT) reported a 4QFY12 DPU of 2.71S¢ (+15.3% YoY). Together with the dividend distributed in the first 3Q of FY12, total DPU came in at 10.01S¢ (+20.3% YoY), outperforming our FY12 DPU forecasts by 5.4%. Revenue for 4QFY12 grew to S$39.0m (+14.3% YoY) while net property income rose to S$28.7m (+13.7% YoY). These strong growths are mainly attributed to strong contributions from Causeway Point (CWP), full year contributions from Bedok Point and positive growth in all other malls. Going forward, we expect FCT to continue to register stronger numbers on the back of

1) increased contributions from CWP as average occupancy and rental rates continue to pick up from its lows during the initial stage of AEI and

2) positive rental reversions in suburban malls to continue. Given FCT’s defensive portfolio, potential to acquire Changi CityPoint in FY13 coupled with the continual interest in high dividend plays amid a strong Singapore dollars and a prolonged low-interest rate environment, we maintain BUY call on FCT with an upward revision in our DDM based (COE: 8.0%, terminal growth: 2.0%) TP of S$2.10

Positive growth from CWP and Bedok Point. Going forward, we expect market confidence for
rental rates in suburban malls to remain intact as we step into the 4th quarter which is traditionally a peak season for retail due to year-end festivities. Additionally, we expect FCT’s DPU to continue to grow on the back of additional contributions from both CWP and Bedok Point. Currently, works at CWP are on track for full completion by December 2012, while Bedok Point continues to grow strongly; contributing S$12.5m to the group’s FY12 revenue.

Current market condition beneficial to FCT share price. In view of a volatile global market, Singapore government 10-year bond has fallen to 1.33% from 1.75% since March as investors continue to view Singapore bonds as a safe investment haven. Going forward, as the global market continues to be plagued by uncertainty, we believe FCT, which is viewed as highly defensive, will continue to be appealing on the back of high liquidity, prolonged low interest rate environment and a strong Singapore currency.

Maintain BUY with revised TP to S$2.10. As the outlook for suburban malls remains strong, together with respectable DPU growth for the rest of the year, we continue to maintain our BUY rating with an upward revision in TP to S$2.10.

• A set of in-line results
• Steady performance supported by healthy rental reversion and acquisitions catalyst in the pipeline
• Maintain BUY at a higher TP of S$2.04