Frasers Centrepoint Ltd (SGX: TQ5), or “FCL”, officially began trading on the Singapore Exchange yesterday, 9 Jan 2014. Fraser and Neave Ltd (SGX: F99) had carved out its property business to form FCL.
Shareholders of F&N got 2 shares of FCL for every share of the former they own. Thailand-based billionaire Charoen Sirivadhanabhakdi is currently the main shareholder of F&N through his two companies; Thai Beverage (SGX: Y92) and TCC Assets.
The business of FCL is grouped into three segments; residential, commercial and hospitality. Its main business is the development of residential properties in Singapore, Australia and China.
Its commercial property business is mainly about managing commercial properties through its two Singapore-listed real estate investment trusts, Frasers Centrepoint Trust (SGX: J69U) and Frasers Commercial Trust (SGX: ND8U).
Lastly, under the hospitality segment, the company owns and manages a portfolio of service apartments internationally.
Results for financial year (FY) 2013
In its FY 2013 earnings announcement for the 12 months ended 30 Sep 2013 that was released on Wednesday night, FCL reported a 17% gain in total net income to S$736m compared to FY 2012. If we strip away the share of FCL’s net income that belongs to minority interests, the profits that belong to shareholders of the company actually grew 12.3% year-on-year to S$722m.
The company’s growth is mainly contributed by an increase in development revenue in Singapore and the hospitality business. The operating profit for the company’s Singapore development business had improved by 66.7% year-on-year while the hospitality business’s operating profit grew by 74%.
Going forward, as seen from management’s presentation on the company’s results, it seems that the property markets in Singapore and China are under pressure due to continued cooling measures by the governments of both countries.
Furthermore, there are signs of an economic slowdown in Australia, which might be damaging to the property market there as well. Nonetheless, the company’s pushing ahead with its commercial and hospitality businesses with more projects in the pipeline.
Foolish Bottom Line
This carve-out seems to be just the beginning for FCL. There are plans for the company to find more synergy with the real estate business of the TCC Group. For example, FCL is exploring the possibility of acquiring some of TCC Group’s hospitality assets to form a hospitality REIT. It will be interesting to observe the progress of FCL.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.