Frasers Centrepoint Limited 3Q FY 15/16 Result

Frasers Centrepoint Limited posted their 3Q FY 15/16 earning report in summary below.

• Revenue declined to $682 million, 32.5% lower than the corresponding quarter a year ago
• PBIT declined to $166.8 million, 46.8% lower than the corresponding quarter a year ago
• Profit before tax declined to $68.2 million, 62.4% lower than the corresponding quarter a year ago
• Profit after tax is $154 million, 15.1% lower than the corresponding quarter a year ago

The drop in revenue was mainly attributable to lower contributions from the group's development portfolio in Singapore, Australia and China. These declines were partially mitigated by the recognition of profits from the Twin Fountains (EC) project following its completion.

Property Development Key Highlights

FCL’s 80:20 joint venture with Keong Hong launched its 628 units Parc Life EC project in April 2016 at Sembawang with only 12.3% units sold. FCL is working towards the launch of a 19,310 sqm private condominium land parcel along Siglap Road in 2017. It is a 40:40:20 joint venture with Sekisui House and Keong Hong that can potentially yield around 800 to 900 apartment  units.

Commercial Property Key Highlights

Maiden profit contribution of $9.1 million and share of fair value gain from Waterway Point mall which was officially opened on 19 April 2016 and receives an average of 2.5 million visitors each month. The Asset Enhancement Initiatives (AEI) at the Centrepoint are expected to be completed by September 2016.

REIT Key Highlights

FCL listed the Frasers Logistics and Industrial Trust (FLT) on 21 June 2016 and got off to an upbeat start with more than 6 times of over subscription by institutional investors. It was the largest pure-play Australian Industrial REIT listed in Singapore with an initial portfolio of 51 Industrial and Logistic properties for about S$1.6 billion in asset. 

Looking ahead on the development front, transaction volumes in the Singapore residential property market continue to be low as prevailing property cooling measures remain in place. While the number of new private homes sold rose from 3,400 units in the first half of 2015 to 3,800 units in the first half of 2016, the residential property price index declined marginally in the quarter ended June 2016, marking an eleventh consecutive quarterly decline. While the Singapore residential market continues to face headwinds, Singapore remains as the Group's home market.

Although their 3Q result is very disappointing but my opinion on FCL is still very optimistic. They are the 3rd largest property developers in Singapore after CDL and Capitaland. They had been giving 8.6 cents of dividend per share for 2 years. If they are able to continue giving me good returns of 5% or more for income, I will be more than happy to be investing on them. Not forgetting about the growth of this company, it is now trading at approximately 30% discount to its NAV of $2.19 per share. If you are looking for stable dividend income with potential growth, this company should be able to fit your bill.