Frasers Centrepoint Limited’s Latest Earnings: What Investors Should Know

Frasers Centrepoint Ltd  (SGX: TQ5) released its second-quarter earnings this morning for the fiscal year ending 31 September 2016 (FY15/16). The reporting period was from 1 January 2016 to 31 March 2016.

Frasers Centrepoint is a real-estate owner and developer with total assets of over S$23.5 billion as of 31 March 2016. It has four main business units: Development Properties; Commercial Properties; Hospitality; and Frasers Property Australia. Frasers Centrepoint is also the sponsor and manager of several real estate investment trusts such as Frasers Centrepoint Trust  (SGX: J69U)Frasers Commercial Trust (SGX: ND8U) and Frasers Hospitality Trust (SGX: ACV).

Financial highlights

Here’s a quick rundown of some of Frasers Centrepoint’s latest financial figures:

  1. Frasers Centrepoint’s revenue for the reporting quarter more than doubled from the same period a year ago. The company ended the quarter with S$898 million in revenue.
  2. But, profit before interest, fair value change, taxation and exceptional items (that’s a mouthful!) grew by ‘just’ 14.4% to S$226.5 million for the reporting quarter.
  3. Furthermore, profit for the period was S$170.3 million, down 2.8% from the previous fiscal second-quarter. A big driver for this is that Frasers Centrepoint recorded a much lower fair value change on investment properties(S$43.2 million a year ago vs. just S$4.45 million).
  4. Diluted earnings per share was 3.12 cents, down from the 4.56 cents recorded over the same quarter last year.
  5. Fraser Centrepointhad S$201.7 million in operating cash flow for the reporting quarter. It spent S$114.2 million in capital expenditure. This gives the real-estate outfit free cash flow of S$87.5 million for the second quarter of FY15/16.
  6. As of 31 March 2016, the company had S$1.48 billion in cash and equivalents and $10.7 billion in debt. This is slight decrease from the $1.37 billion in cash and equivalents and $10.3 billion in debt it recorded at the end of FY14/15.
  7. The company also ended the reporting quarter with a net asset value per share of $2.22, up slightly from the $2.20 seen a year ago.

Frasers Centrepoint’s revenue was up strongly due to the recognition of the Twin Fountains executive condominium project and North Park Residences private condominium project. The real estate outfit generated positive free cash flow, but maintained a net debt position.

On a separate note, Frasers Centrepoint also issued a S$250 million 10-year fixed rate note. The notes bear interest of 4.25% per annum and matures on 21 April 2026. The note falls under its S$3.0 billion multicurrency debt issuance programme.

Elsewhere, an interim dividend of 2.4 cents per share was also declared, unchanged from a year ago.

Operational highlights

Among the key highlights, Frasers Centrepointofficially opened Waterway Point on April 2016. Six million visitors have walked through the doors of the new mall since. The real estate outfit also entered into an 80:20 joint venture with Keong Hong to launch the 628-unit Parc Life EC project at Sembawang.

Lim Ee Seng, the group’s chief executive, added his take on the results:

“Increasing the proportion of income from recurring sources has been one of our core strategies over the past few years. Our financial performance in the first half validates the effectiveness of this strategy.

FCL’s [Frasers Centrepoint Limited] growing base of recurring income underpinned our performance as contribution from our completed and largely sold development projects in Singapore tapered off, and timing differences in completions resulted in lower development contributions from Australia and China. We recently launched Parc Life EC in Singapore, and we also expect a significant level of completions in Australia and China in the second half of our financial year.”

At its closing price of S$1.68 today, Frasers Centrepoint s trading at 0.76 times its latest book value.

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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 Chin Hui Leong owns units in Frasers Centrepoint Trust.