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Institutional Investors Recently Bought Shares of Frasers Logistics and Industrial Trust. Should You Buy Too?

Frasers Logistics and Industrial Trust (SGX: BUOU), or FLT, is a Singapore-listed REIT with a portfolio comprising 81 logistics and industrial properties concentrated within major logistics and industrial markets in Australia, Germany, and the Netherlands.

Institutional investors have been buying FLT’s shares lately, with a net purchase of about S$7 million (according to sgx.com). Does that mean FLT is cheap now? If so, it might be a good opportunity for do-it-yourself investors to consider investing in the REIT.

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Unfortunately, there’s no easy answer, but we can still get some insight by comparing FLT’s current valuations with the market’s valuations using the price-to-book (PB) ratio and the distribution yield. (I will be using the average PB ratio and distribution yield for the 42 REITs that are listed in Singapore’s stock market.)

With that, let’s look at the comparison below:

Source: Yahoo! Finance, OCBC Weekly S-REITs Tracker

FLIT’s distribution yield is lower than that of the market average, indicating that it’s trading at a higher valuation. Similarly, its P/B ratio is higher than that of the market average.

Conclusion

In sum, we can argue that FLT is trading on the higher end of the valuation spectrum given its low distribution yield and high PB ratio when compared to the market average.

Still, investors might want to learn more about the fundamentals of the REIT. After all, such a valuation premium might be reasonable if it has better prospects than its peers.

Want to keep reading on how to lock in those sweet REIT dividends? Our Complete Guide To Buying The Best Singapore REITs dives into what we think you need to know about finding the best REITs that regularly hand you a fat dividend cheque. Click here to download your FREE guide.

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.