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

Yesterday, Frasers Centrepoint Ltd  (SGX: TQ5) released its second quarter earnings for its financial year ending 31 September 2017 (FY16/17). The reporting period was from 1 January 2017 to 31 March 2017.

As a quick background, Frasers Centrepoint is a real-estate owner and developer with total assets of over S$25 billion, as of 31 March 2017. There are a number of REITs in Singapore’s market that fall under the Frasers Centrepoint umbrella and they are: Frasers Centrepoint Trust  (SGX: J69U)Frasers Commercial Trust (SGX: ND8U)Frasers Logistics and Industrial Trust (SGX: BUOU), and Frasers Hospitality Trust (SGX: ACV).

You can catch the results from Frasers Centrepoint’s previous quarter here.

Financial highlights

Below’s a quick rundown on some of the company’s latest financial figures for the second fiscal quarter:

1. Frasers Centrepoint’s revenue declined 21.4% year-on-year to $705.8 million.

2. Profit before interest, fair value change, taxation, and exceptional items (that’s a mouthful!) was S$71.2 million down 35.5% compared to a year ago.

3. Profit for the period was S$71.2 million, down 42.2% year-on-year. The previous year included a $13.9 million gain on exceptional items and a $0.9 million loss on fair value.

4. Earnings per share was 1.34 cents, down from the 3.12 cents recorded in FY15/16’s second quarter.

5. Frasers Centrepoint had S$46.5 million in operating cash flow and spent $201.7 million in capital expenditure. The real-estate outfit thus generated negative free cash flow of S$155.2 million.

6. As of 31 March 2017, the company had S$1.41 billion in cash and equivalents and $10.5 billion in debt. This is a slight improvement from the S$1.48 billion in cash and equivalents and $10.7 billion in debt recorded in FY15/16’s second quarter.

7. Frasers Centrepoint ended its reporting quarter with a book value of $2.34 per share, up 5.4% from a year ago.

In FY15/16’s second quarter, Frasers Centrepoint benefited from the revenue recognition of the Twin Fountains executive condominium project and North Park Residences private condominium project. The lack of a similar contribution in the reporting quarter led to revenue falling 21.4%. Meanwhile, the company generated negative free cash flow and kept a net debt position.

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

Operational highlights

Among the key operational highlights mentioned in the earnings release are:

1. Frasers Centrepoint entered a conditional agreement to acquire 86.56% of Geneba Properties, which has logistics and industrial assets in Germany and the Netherlands.

2. The firm entered into a 20:80 joint venture with TCC Assets for a mixed-use development project named “One Bangkok” in Thailand.

3. Frasers Centrepoint increased its stake in Golden Land Property Development to 39.9%, up from 35.6%. This cost $24.7 million.

4. Frasers Centrepoint acquired a 40% stake in TICON Industrial Connection for a hefty $520 million.

Commenting on Frasers Centrepoint’s performance, its chief executive officer, Panote Sirivadhanabhakdi, said:

“The merits of our longstanding strategy of growing our asset portfolio in a balanced and sustainable manner, across geographies and property segments were evident from our first half results.

Profits from the completion of development projects in Australia and China supported FCL’s [Frasers Centrepoint Limited] performance amid lower contributions from Singapore. We will continue to make selective investments in overseas and recurring income assets as we work towards our strategic objective of achieving earnings sustainability.”

At its closing share price of S$1.865 yesterday, Frasers Centrepoint has a dividend yield of 4.6% and a price-to-book ratio of 0.8.

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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.