Fortune REIT

Fortune REIT: OCBC maintains Buy with HK$7.28 TP. House note that the growth in HK’s retail sales has picked up significantly since 4Q12. Combining the first two mths of 2013 to eliminate distortions from the timing of Chinese New Year, retail sales climbed up 15.8% in value. Robust retail sales will continue to underpin the growth in retail rents throughout HK. The media has reported that a group has called for the boycott of Park’N Shop supermarket chain, which is part of Li Ka-shing’s Hutchison Whampoa Ltd, in support of dock workers who are striking for better work conditions. Park’N Shop is FRT’s top tenant, accounting for 8.0% of the REIT’s total gross rental income in Dec 2012. According to FRT management, businesses are running as usual and impact to the Park’n Shop outlets in FRT’s malls has not been seen. Mgt has indicated that 2013's rental reversions are likely to be in the mid-teen percentages. FRT has a low gearing of 23.4% and no refinancing needs till 2015.