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Stocks In Focus SG (Frasers Commercial Trust, SPH REIT, Sysma Hldgs) – 25/07/13
Frasers Commercial Trust’s DPU Up By 28.8%
Frasers Commercial Trust (FCOT) released its 3Q13 financial results after market closed yesterday. FCOT reported an increase of 31.2 percent in distributable income to $14.4 million over $11 million from the same quarter a year ago. FCOT declared a distribution per unit (DPU) of $0.0219, 28.8 percent higher than that of 3Q12. Despite the higher distribution, the revenue of FCOT declined by 16.1 percent to $30 million from $35.7 million a year ago due to the divestment of KeyPoint and its Japanese properties. When removing revenue of KeyPoint and its Japanese properties from 3Q12, the gross revenue would have increased by 2.5 percent. The higher DPU of FCOT this quarter was mainly contributed by the redemption of 319.7 million Series A convertible perpetual preferred units in January 2013 and April 2013.
Significance: FCOT has seen positive rental reversions from its properties, which are expected to contribute positively to distributable income going forward. The trust will continue to monitor movements in interest rates and the Australian dollar and exercise prudent measures to mitigate the risks.
SPH REIT Gains 9.4% On Trading Debut
SPH REIT made its trading debut yesterday, rising 9.4 percent from its initial public offering price (IPO) of $0.90 to close at $0.985 for the day. SPH REIT, which lists with Paragon and Clementi Mall in its initial portfolio, offers a distribution yield of 5.6 percent annualised for the second half of the current financial year 2013. For the next financial year, the yield is predicted to be 5.8 percent. Backed by its blue-chip sponsor, Singapore Press Holdings, the IPO had garnered strong interest, particularly from the institutional investors as the placement tranche was about 42 times subscribed and the public tranche was 25 times subscribed. SPH REIT’s entry to Singapore Exchange brings the number of REITs and property trusts on the bourse to 33, with a combined market capitalisation of $60 billion, compared with just three REITs 10 years ago with a total market value of $1.2 billion, a year after the regime was launched in 2002. Shares of SPH REIT opened $0.005 or 0.5 percent higher at $0.99 today.
Significance: According to an analyst at UOB Kay-Hian, investor interest had picked up with bond yields stabilising recently. Particularly, the defensive nature of retail REITs makes SPH REIT an attractive investment given the volatility present in the markets as the “mismatch between rentals and asset prices” is the narrowest for retail properties compared with other asset classes.
Sysma Completes 60% Equity Stake Investment In Gcap Properties
Building construction services provider Sysma Holdings announced that it has completed the purchase of a 60 percent equity stake of Gcap Properties at a purchase price of approximately $21.9 million. The deal is structured in such a way that it comprised $7.4 million and $14.5 million for the irrevocable and unconditional assignment of the shareholder’s loan. Sysma paid the sum of $15.5 million as a deposit and the balance of $6.4 million will be raised through the allotment and issuing 28 million new ordinary shares at an issue price of $0.23 per consideration share. Gcap Properties is currently developing a 20-storey residential development comprising 68 units of apartments with facilities at Margate Road, valued as at 30 April 2013, at $75.6 million. Sin Soon Teng, executive chairman and chief executive officer of Sysma said: “We are pleased to complete the purchase of our 60 percent stake in Gcap Properties. The construction of the apartments will also be done by Sysma. This will ensure the timely completion of the project.”
Significance: Apart from the benefit of timely completion of the project on hand, thereby avoiding any unnecessary additional development costs, this acquisition will allow Sysma to venture up the value chain into the property development realm, which often provides a higher profit margin.
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