Assuming FY 2019/2020 (annualized base on Q3 results) Operating cash flow = $67 million Joint Venture = $4 million Capex = -$28 million Distribution payout = -$87 million. Distribution payout by units = $18 million (double of last year show in Q3 results) Finance cost = -$16 million Borrowing for AEI = $27 million (3Q borrowing minus repayment) Est. Google lease Rent Income ($4psf) = $14 million Est. China Square Central Full lease Income ($15psf) = $1 million
Deficit of $0.
Therefore FCOT is on the edge of dropping its DPU if there is any hiccups, they are running out of ammo to help maintain the DPU. Cash is a at lowest level since the divestment of 55 Market Street. Shareholders has to continue to pick up distribution reinvestment plan to support the DPU. However that also increase the share base and will reduce the DPU in the longer term. Do remember Microsoft is moving out of Alexandra Technopark.
I have been eyeing on Frasers Commercial Trust(FCOT) for awhile since I divested CapitaCommercial Trust back in 2017. However the news of Hewlett-Packard moving out of FCOT hold me back. I was informed recently that my office is moving to Alexandra Technopark. This prompt me to take a fresh look on the REIT. Alexandra Technopark I believe Hewlett-Packard risk has been fully priced in. Hewlett-Packard now only occupy 3.7% of gross rental income of FCOT portfolio. AEI on Alexandra Technopark to be finished 2H2018, got some new
facilities and exercise areas. Too bad no gym doh. Assuming Alexandra Technopark will continue to attract tenants, this is a catalyst for DPU growth.
55 Market Street Divestment After the divestment completion in Aug 31 2018, gearing is reduce to 26.5% assuming proceeds are used to pay down debts. This allows more rooms for acquisition, RORF from sponsor Frasers Property. NAV pro forma is $1.70 as at 30 sept 2017, adjusted to current price, NAV should be $1.60. At current price of $1.41, PB ratio is 0.88.
Conclusion The completion of AEI at China Square Central and Alexandra Technopark (as well as tenant growth) will be near
term catalyst. In addition there will be room for more acquisitions.
However, management fees are 100% paid in
units compare to 12% in 2017. Reversing this may halt DPU growth but
remain stable. In 2Q2018, 1,884,606 units were issued at $1.4192 as
management fees worth $2.675 Million which is equivalent to $0.031 per
unit if taken in cash. DPU for the pass few years has been stagnant, probably due to FCOT' plans for Hewlett-Packard's departure as well as the cost for the AEI. At DPU of 9.6cents, current price of $1.41 give a yield of 6.81%. With adjusted pro forma of $1.60, PB ratio 0.88. Assuming a yield of 7%, TP to be set at $1.37 or below. I believe the worst is over for FCOT.
Ascendas Hospitality Trust My favorite pick. Read all about it. Forward yield of 7.5% at current price of S$0.77. Have no reason for it price to drop. Frasers Commercial Trust HP vacated part of its office at Alexandra TechnoPark (ATP) in FYQ4 2017 and FYQ1 2018. DPU maintained at 2.40 cents since. HP to fully vacated ATP by Sept 2018. Assuming with AEI and rental space back-fill improves, 2.40 cents should maintain. which give a 7.05% yield at a price of $1.36. with up to 10% MOS. TP is S$1.23 to S$1.29. StarhillGbl Reit On my last take on StarhillGbl Reit, yield is at 7.27% with a price of S$0.65, estimate DPU of 4.73 cents adjusted for possible DPU reduction and effects from AEI. If I demand a 7% yield with up to 10% MOS. TP is S$0.61 - S$0.675. Sasseur Reit Go into outlet retail growth in china as middle class grows. China being so big should have no issue to grow as big as US/EU. Estimate 6 cents DPU from FY2019, current yield 8.1% at a price of S$0.74. Current trend is bearish, price been tanking since IPO. Another 10% MOS will be S$0.675 Capitaland Retail China Trust Singapore Retail Segment is facing headwinds from online shop, most mall now have cater to more F&B outlets. However China's retail segment has a better prospect as middle class grows and spend more. From the past 1st Quarter results, the recent placement (an increase of 10% shares) has diluted the DPU. the current DPU is supported by the capital distribution from a portion of the gain from the disposal of Anzhen. Probably why the price tanked since FYQ4 results was released Forward looking: The Joint venture acquisition of Rock Square reported renewal revision of more than 20%. More than 50% of expiring leases are expect to renew from 2018 to 2020
Current Yield of 6.8% with the price of S$1.48. Demanding 7% yield with up to 10% MOS, TP will be S$1.3 - S$1.44 M1 M1 drops further. And while everyone joked about it falling to S$1.68 in forum and social apps, most are just joking but the price high a new low of S$1.51, giving a yield of 7.55%. Price had since rebounded. But I doubt it is the end of it as TPG launch is approaching. dividend of 15.3 cents in 2015 has drop to the current 11.4 cents, that is a 25.5% over 2 years. At its peak on 22/2/2015 of S$3.96, dividend was 18.9, 4.7% yield. The price was pushed up by the increase in dividend, obviously M1 will not be able to payout that amount anymore. Price of course has come down and are still being corrected. We would need to see a stabilize dividend and that is not gonna happened until we see how TPG will impact its profits. Demanding a 7% yield, TP will be at S$1.62. assuming profit to be further hit 25% for the next 2 years. with a MOS of 25% to 30%. TP S$1.14 to S$1.22. Historically, M1 yield range from 4.3% to 7.1% (AR 2017). So it won't be unreasonable for M1 to have a price giving a yield of 4 to 5%. UMS Holdings Their Strong FCF still stands, promising the same amount of dividend will be of no issue, for the last 8 years. The world is going into the era of IoT. As these item become part and parcel of our life, it would not go away. Demand will soar and more tech products will be produced. Just like the internet did. Main customer Applied materials has been growing in double digit, this will create more demand from them. With a dividend of 6 cents, give a yield of 7.19% at a price of $0.835. This is quite a nice price to get some.
