Tuesday, June 16, 2015

Frasers Centrepoint

Frasers Centrepoint: CIMB recently visited some of Frasers Australand’s projects in Sydney and Melbourne and met with senior management. Management indicated that integration of Frasers Property Australia and Australand is largely completed and possibility of rebranding is still being evaluated. While recurrent income remains key to the FCL group, Frasers Australand is looking to ramp up the development portion of the business to 50% of asset value from the present 40% as accelerated residential and industrial development activities consume its landbank.

Based on current development pipeline, these 2 segments are projected to have a total end value of S$9.7bn vs current value of S$2.4bn. Residential demand is supported by low interest rates and undersupply in Sydney and Melbourne while renewal and relocation demand from retail and logistics players underpins appetite for industrial space.
CIMB maintains its ADD rating on Frasers Centrepoint (TP: $2.02) as the stock is trading at a steep discount of 38% to its RNAV of $2.88. The key catalyst would be an increase in the stock’s low free float.

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