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Frasers Logistics & Commercial Trust BUOU

Morningstar Rating
SGD 0.99 0.00 (0.00%)
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Company Report

FLCT Earnings: Net Property Income Margins Miss on Weak Commercial Portfolio Occupancies

Frasers Logistics & Commercial Trust’s fiscal 2024 first-half net property income of SGD 159 million was slightly below our expectation, making up 46.9% of our full-year estimate. However, the impact on distributions per unit was offset by the distribution of SGD 13.5 million of divestment gains, and the trust’s DPU of SGD 0.0348 was in line with our expectation. The miss in the NPI was due to lower NPI margins for the commercial properties, where average occupancies remain under pressure, and higher nonrecoverable land tax for the Australian logistics and industrial properties. We cut our near-term NPI margin estimates but expect margins to recover by the end of our forecast period as the commercial assets’ occupancy rates should gradually recover. Our DPU forecasts remain broadly the same as we expect management to continue to top up its distribution with divestment gains to keep DPU relatively stable. As such, we keep our fair value estimate at SGD 1.14 per unit. Based on the current price, we think the trust is undervalued, trading at an attractive fiscal 2024 distribution yield of 7%. We think that the weakness in its commercial portfolio has been priced in, with a 24.6% decline in its unit price over the last 12 months. We like the trust for its portfolio of logistics and industrial properties that benefit from favorable supply/demand market dynamics and expect this segment, which makes up 71% of the portfolio, to drive the trust’s performance over the near to medium term.

Price vs Fair Value

BUOU is trading at a 843% premium.
Price
SGD 0.99
Fair Value
SGD 3.71
Uncertainty
Low
1-Star Price
SGD 8.72
5-Star Price
SGD 1.81
Economic Moat
Mjfr
Capital Allocation
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Bulls Say, Bears Say

Bulls

FLCT has a strong sponsor with a large pipeline of logistics, industrial, and commercial assets for acquisition.

Bears

Landlords of logistics and industrial properties have low pricing power, given the limited barriers to entry in constructing such properties.

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Trading Information

Previous Close Price
SGD 0.99
Day Range
SGD 0.991.00
52-Week Range
SGD 0.961.30
Bid/Ask
SGD 0.99 / SGD 0.99
Market Cap
SGD 3.72 Bil
Volume/Avg
2.8 Mil / 12.4 Mil

Key Statistics

Price/Earnings (Normalized)
19.15
Price/Sales
8.69
Dividend Yield (Trailing)
7.07%
Dividend Yield (Forward)
7.07%
Total Yield
7.07%

Company Profile

Frasers Logistics & Commercial Trust was established following the merger between Frasers Logistics and Industrial Trust and Frasers Commercial Trust in April 2020. As of March 31, 2024, the trust has a diversified portfolio of 112 logistics, industrial and commercial properties valued at around SGD 6.8 billion across Singapore, Australia, Germany, the Netherlands, and the United Kingdom. The trust is externally managed by Frasers Logistics & Commercial Asset Management, a subsidiary of Frasers Property, which owns around 23% of the trust.
Sector
Real Estate
Industry
REIT - Industrial
Stock Style Box
Mid Growth
Total Number of Employees
38

Competitors

Valuation

Metric
BUOU
M44U
A17U
Price/Earnings (Normalized)
19.1517.9220.06
Price/Book Value
0.850.971.16
Price/Sales
8.699.137.67
Price/Cash Flow
15.1815.8716.29
Price/Earnings
BUOU
M44U
A17U

Financial Strength

Metric
BUOU
M44U
A17U
Quick Ratio
0.280.460.20
Current Ratio
0.290.600.24
Interest Coverage
−0.835.751.69
Quick Ratio
BUOU
M44U
A17U

Profitability

Metric
BUOU
M44U
A17U
Return on Assets (Normalized)
−1.84%3.96%1.05%
Return on Equity (Normalized)
−2.92%7.85%1.91%
Return on Invested Capital (Normalized)
−1.21%5.13%2.31%
Return on Assets
BUOU
M44U
A17U
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