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Frasers Centrepoint Ltd Continues Investing In Australia

Frasers Centrepoint Ltd (SGX: TQ5) has been very active in Australia after its acquisition of the Australian company Australand in 2014. This morning, Frasers Centrepoint announced yet another land acquisition in the country.

The land acquired is located in Wyndham Vale, a suburb of Melbourne and had cost the company S$466.0 million. Frasers Centrepoint would be developing the 115 hectare plot into a mixed-used community with about 1,200 residential units, amenities, and 20,000 square metres of retail facilities. The company expects the project to be home to more than 3,300 people in the future.

This is one of the largest land acquisitions in Melbourne over the past few years and it shows the optimism that Frasers Centrepoint has in the country.

Beyond this latest acquisition, the company is also looking to replenish its land bank in Singapore and is scouting around for more opportunities to grow its business in China. On the whole, the company has a target of moving most of its operating profits away from its property development business and into its commercial, industrial, and hospitality businesses that can generate recurring income.

The company is planning to achieve that by injecting more assets into its sponsored REITs. It is also aggressively growing its hospitality business by adding more units under its management through acquisitions and management contracts.

Frasers Centrepoint has already increased the proportion of its income from recurring sources from just 54.1% in the first nine months of 2015 to 71.1% in the first nine months of this year. Singapore and Australia remain the company’s most important geographical markets – they contributed 72.6% of its overall profit before interest and tax in the first three quarters of 2016.

All said, Frasers Centrepoint seems to be very active in growing its business. The company is currently trading at 7.5 times trailing earnings and offers a 5.7% dividend yield.

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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 writer Stanley Lim owns shares in Frasers Centrepoint.