Market Pulse: Fraser Commercial Trust (17 Dec 2012)

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.31

MARKET PULSE: Fraser Commercial Trust

17 Dec 2012

KEY IDEA Frasers Commercial Trust: Well-positioned for growth We are very positive on Frasers Commercial Trust's (FCOT) transformation over the past one year. At the close of 4QFY12, FCOT announced the exit of the Japan market with the divestment of its Japan properties. We like the transaction because the divestment would enhance the portfolio occupancy and weighted average lease to expiry, and reduce its gearing ratio from 36.8% to 28.6%. This will significantly strengthen its financial position and flexibility, and aid FCOT in seeking the release of 55 Market Street and Caroline Chisholm Centre (CCC) from its securitized pool. More recently, FCOT had also successfully redeemed 162.6m CPPUs, or ~47.6% of total outstanding CPPUs, in cash. With this positive development, we expect FCOT to post an improvement in the distributable income going forward. In addition, the increased stake in CCC and expected improved performance at China Square Central are likely to continue to contribute positively to its rental income. Hence, we are staying optimistic on its growth potential in FY13. Maintain BUY with an unchanged fair value of S$1.31 on FCOT. (Kevin Tan)

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