Frasers Property - Increasing Debts and Perpetual

As the recent Hyflux downfall also focus on it's perpetuals bonds, I am looking into YY Inc's preferred shares. And then just yesterday, Frasers Properties announced a issue of perpetuals securities. After some chit chat at the post in Investingnote. Basically, perpetuals securities pose as equity but are actually debts. You can about it from this article from The Edge Singapore. To find the actual gearing for Frasers Properties, I have to make some adjustments. I have include the latest $400million perpetuals securities for 2019 Q1. As you can see the supposed recorded Debt/Equity was 105.7%.

Although high debt deemed to be bad, as long as interest rate does not increase rapidly and the cash flow can support the interest expenses incurred, is of a lesser concern. Property Developer's profits can be lumpy at times, so I take the average 4yrs operating cash flow (OCF) of Frasers Property and that give a OCF/Interest of 2.71x. Interest coverage is also more than 3x.

Frasers Property Shareholders will have to monitor the numbers and if they continues to be more aggressive with the debt level.