Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST
CIMB in a July 1 research report says: "FCOT is a commercial REIT investing primarily in offices in the region. We use DDM (discount rate 9.4%) to value FCOT at 99 cents. Since taking over in 2008, FCOT's management has stabilised its capital structure and assets and divested non-core holdings.
"With a stabilised portfolio and capital structure and a strong sponsor in F&N, we see no reason for its depressed 40% discount to book and forward yields of 7-8%. We see catalysts from early re-financing, the unlocking of value from AEI at China Square Central and improvements in occupancy and rentals.
"We do not see an overhang from CPPUs, with limited dilution of 4% on full conversion. Redemption of the CPPUs at par could even allow accretion if overall funding costs for FCOT come in below the CPPU rate of 5.5%. OUTPERFORM (initiating coverage)."
Company Name: FRASERS COMMERCIAL TRUST
| Research House: CIMB | Price Call: BUY | Target Price: 0.99 |
CIMB in a July 1 research report says: "FCOT is a commercial REIT investing primarily in offices in the region. We use DDM (discount rate 9.4%) to value FCOT at 99 cents. Since taking over in 2008, FCOT's management has stabilised its capital structure and assets and divested non-core holdings.
"With a stabilised portfolio and capital structure and a strong sponsor in F&N, we see no reason for its depressed 40% discount to book and forward yields of 7-8%. We see catalysts from early re-financing, the unlocking of value from AEI at China Square Central and improvements in occupancy and rentals.
"We do not see an overhang from CPPUs, with limited dilution of 4% on full conversion. Redemption of the CPPUs at par could even allow accretion if overall funding costs for FCOT come in below the CPPU rate of 5.5%. OUTPERFORM (initiating coverage)."
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