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

Yesterday, Frasers Centrepoint Limited  (SGX: TQ5) released its first quarter earnings report for its financial year ending 31 September 2017 (FY16/17). The reporting period was from 1 October 2016 to 31 December 2016.

As a quick background, Frasers Centrepoint is a real-estate owner and developer with total assets of over S$25 billion, as of 31 December 2016. It has three strategic business units, namely, Singapore, Australia, and Hospitality. It also has an international business arm.

Within those four different businesses, Frasers Centrepoint holds a number of Singapore-listed REITs. Some of them are Frasers Centrepoint Trust  (SGX: J69U)Frasers Commercial Trust (SGX: ND8U) and Frasers Hospitality Trust (SGX: ACV).

Financial highlights

The following’s a quick rundown on some of Frasers Centrepoint’s latest financial figures:

  1. Total revenue rose 44.7% over FY15/16’s first fiscal quarter. The real-estate outfit recorded S$971.7 million in revenue for the first quarter of FY16/17.
  2. Profit before interest, fair value change, taxation, and exceptional items (that’s a mouthful!) was S$331.1 million for the reporting quarter, up 56.9% year-on-year.
  3. Profit for the period was S$187.5 million, up 90.1% from the same quarter a year ago.
  4. Earnings per share was 6.14 cents, 99% higher than the 3.09 cents recorded in the same quarter in FY15/16.
  5. Frasers Centrepoint generated S$51.6 million in operating cash flow for the reporting quarter. It spent S$274.9 million in capital expenditure, giving rise to negative free cash flow of S$223 million. This is a decline from the S$161.5 million in positive free cash flow record in the first quarter of FY15/16 (S$174 million in operating cash flow and S$12.5 million in capex).
  6. As of 31 December 2016, the company has S$1.63 billion in cash and equivalents and S$9.98 billion in debt. This is an improvement from the S$1.33 billion in cash and equivalents and S$10.31 billion in debt it recorded at the end of FY15/16.
  7. Frasers Centrepoint ended the reporting quarter with a net asset value per share of S$2.38, up 4.4% from a year ago.

Frasers Centrepoint’s revenue was up from higher contributions from its Singapore strategic business unit (SBU) and International business unit. But, the real estate outfit generated negative free cash flow and still maintained a net debt position, although the balance sheet did show some improvement.

Operational highlights

Among the key highlights during the quarter was Frasers Centrepoint’s purchase of an additional stake in Golden Land Property Public Company Limited for S$24.7 million. The deal bumped up Frasers Centrepoint’s ownership of Golden Land to almost 40%.

The real estate firm also completed its acquisition of a 40% stake in TICON Industrial Connection Public Company Limited for S$520 million in January 2017.

Panote Sirivadhanabhakdi, Frasers Centrepoint’s chief executive, shared his take on the quarter in the earnings release:

“Our first quarter performance was driven by development profits from the Singapore SBU [strategic business unit] and International business unit. During this quarter, completions in China boosted contributions from the International business unit.

“Meanwhile, the Singapore SBU benefitted from the sale of our last remaining bungalow at Holland Park. We are pleased with these development contributions.

To achieve our objective of sustainable earnings growth, we will continue executing our proven strategies of growing recurring and overseas income. We remain disciplined in making investments across our core and secondary markets so that FCL continues to deliver shareholder value.”

Fraser Centrepoint’s shares closed at S$1.60 each yesterday. The real estate firm offers a dividend yield of 5.4%.

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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.