Analysts from CGS-CIMB Research and DBS Group Research are positive on Frasers Logistics Commercial Trust (FLCT) following the REIT’s 1HFY2021 results ended March.

For the half-year period, FLCT reported 9.5% higher distribution per unit (DPU) of 3.8 cents on May 6, as well as record revenue of $231.7 million, representing a 95.1% y-o-y surge.

CGS-CIMB analysts Lock Mun Yee and Eing Kar Mei have kept “add” on the REIT with an unchanged target price of $1.57.


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They have also left their DPU estimates for the FY2021 to FY2023 unchanged, as FLCT’s DPU of 3.80 cents stood within expectations at 481% of their FY2021 forecast.

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“We continue to like FLCT’s visible inorganic growth potential and income resilience, backed by a long weighted average lease expiry (WALE),” write Lock and Eing in a May 6 report.

FLCT, for the 1HFY2021, reported portfolio occupancy of 96.8% with a WALE of 4.7 years.

The analysts also see the REIT being “well-positioned to tap into acquisition or asset enhancement or development opportunities” with its debt headroom of $1.9 billion (assuming 50% gearing).

DBS analysts Dale Lai and Derek Tan have also maintained “buy” on FLCT with the same target price of $1.85.

The figure is based on the assumption that FLCT will have $600 million of acquisitions by the end of FY2021, say the analysts in a May 6 report.

Lai and Tan deem FLCT the “cheapest large-cap logistics REIT in Singapore” as its target price of $1.85 imply target yields of 4.1% to 4.3% for the FY2021 to FY2022.

This, they say, is “fair given [FLCT]’s substantially freehold portfolio”.


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“In our view, there is room for further compression if we compare FLCT to its large-cap peers which are trading at target yields of 3.5-4.0%,” they write.

Since its merger with Frasers Commercial Trust, the REIT has acquired over $300 million worth of assets from its sponsor.

“Despite this, FLCT still has the largest right of first refusal (ROFR) pipeline valued at more than $5.0 billion that could double its portfolio, a visibility like no other,” say Lai and Tan.

On this, the analysts have estimated a “robust” 8% DPU growth in the FY2021 for FLCT, driven by full-year contribution from its enlarged portfolio.

Lai and Tan have also pegged an additional 4% DPU growth in FY2022 as FLCT “builds on its organic growth strategy”.

“With a significantly larger portfolio ($6.0 billion), FLCT has the capacity to undertake development projects or redevelopment of older assets that could drive upside to earnings in the longer term,” they add.

As at 2.07pm, units in FLCT are trading flat at $1.48, or 1.3 times P/NAV, according to DBS’s estimates.