FCT – CIMB

Growth strategy intact

• Maintain Outperform and target price of S$1.73. Elaboration of management’s plans following FCT’s acquisition announcement of Northpoint II and Yew Tee Point last week has added to our confidence that the outlook remains positive for FCT, with both organic and inorganic growth catalysts in place. We also like management’s steady execution and conservative capital management. We maintain our estimates and DDM-target price of S$1.73 (discount rate 7.9%).

• Significant diversification with new acquisitions. Asset-concentration risks should be substantially reduced with income contributions from Causeway Point dropping from 64% to 51%. Contributions from the top 10 tenants would be reduced from 32.7% to 25.7%.

• More in the acquisition pipeline. FCT is likely to venture into eastern Singapore with its sponsor’s assets, Bedok Mall, and the Changi Business Park mixed development completing over 2010-11.

• Causeway Point’s asset enhancement. Plans to enhance its largest asset, Causeway Point, continue, and would likely be announced this year. Asset enhancement will be carried out in phases so as to minimise disruptions to businesses and income contributions.