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What Investors Should Know About Frasers Commercial Trust’s Latest Earnings and Valuation

Photo credit: Rafael Matsunaga. Licence: http://creativecommons.org/licenses/by/2.0/

Frasers Commercial Trust (SGX: ND8U) is a real estate investment trust that focuses on commercial properties. It has ownership stakes in six commercial properties located in Singapore and Australia. Its portfolio in Singapore includes China Square Central, 55 Market Street, and Alexandra Technopark.

There are two things about Frasers Commercial Trust that investors may want to know about right now: Its latest financial performance and valuation.

Financial performance

Here’s a table showing important items from Frasers Commercial Trust’s financial performance for the fourth quarter of its financial year ended 30 September 2017 (FY17).


Source: Frasers Commercial Trust’s FY17 fourth quarter earnings press release

We can see that Frasers Commercial Trust delivered a poor performance in the reporting quarter.

The REIT attributed its results to higher repair and maintenance works for Caroline Chisholm Centre incurred during the reporting period, as well as lower occupancy rates for Alexandra Technopark, China Square Central and Central Park. Although the REIT’s fiscal fourth quarter numbers had plenty of room for improvement, its full-year performance for FY17 was pretty stable, with both the gross revenue and distribution per unit unchanged from FY16.

Frasers Commercial Trust ended the reporting quarter with a portfolio committed occupancy rate of 85.9%. The Singapore portion had an occupancy rate of just 77.8%, while the Australian portfolio was at 96.5%.

Going forward, the REIT plans to enhance and reposition the retail podium in China Square Central at a budget of around S$38 million. The asset enhancement initiative is expected to commence in the first quarter of 2018, with a completion date of mid-2019.

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows Frasers Commercial Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs that are in Singapore’s stock market.


Source: SGX Stock Facts

We can see that Frasers Commercial Trust is trading at a discount to the market average given its lower PB ratio and higher distribution 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 contributor Lawrence Nga doesn’t own shares in any companies mentioned.