FCT – CIMB

Resilient performer

• Maintain Outperform. FCT is the best proxy for suburban retail mall space in Singapore, in our assessment. During past economic downturns, rents and occupancy levels of suburban retail space were the sturdiest, attributable to a dearth of suburban retail supply and tenants catering to non-discretionary spending.

• No new additions. We recently removed our forecast of acquisitions for Northpoint 2, Yew Tee Mall and Bedok Mall, while maintaining our expectation of near-full occupancy for FCT as there is no known coming supply in the vicinity of FCT’s major malls, Causeway Point and Northpoint.

• Unchanged DDM-derived target price of S$1.13 (discount rate 9.7%). With no major refinancing risks in the next two years, we expect distribution to remain stable. Current P/BV of 0.59x is moderately above the average in the S-REIT sector, but significantly lower than peer CMT’s 0.9x. Forward yields of 10.1% are below the average S-REITs’ 13.6%.