SG Movers for Thursday: Frasers Cpt Tr Was the Top Gainer

Frasers Centrepoint Trust (FCT) was the top gainer on the Singapore Exchange (SGX) on Thursday, with its stock price surging by 3.62% to SGD 2.21. The retail real estate investment trust (REIT) has been on a roll lately, driven by a combination of strong financial performance, strategic acquisitions, and high occupancy rates. But is this rally sustainable, or is it just a flash in the pan?

Let's start with the numbers. FCT's retail portfolio comprises nine suburban malls and an office building, with a total net lettable area of approximately 2.7 million square feet. The portfolio has a committed occupancy rate of 99.7%, which is a testament to the trust's ability to attract and retain tenants. This high occupancy rate has translated into strong rental income and robust operating performance.



FCT's recent financial performance has been impressive. The trust reported healthy FY24 results, with earnings per share (EPS) exceeding analyst expectations. This strong performance was driven by a combination of factors, including strategic asset enhancement initiatives (AEIs) and lease refreshes, which have helped to boost rental income and maintain high occupancy rates.

But it's not just about the numbers. FCT has also been active on the acquisition front, with the recent purchase of Northpoint City South Wing for approximately SGD 380 million. This acquisition is expected to enhance FCT's portfolio and provide additional income streams, which could drive the stock price higher in the long term.



However, there are also some concerns that investors should be aware of. FCT's debt is not well covered by operating cash flow, which could pose a risk to the company's financial health if interest rates rise or if the company faces unexpected expenses. Additionally, FCT's dividend of 5.65% is not well covered by free cash flows, which could raise concerns about the sustainability of the dividend in the long term.

So, is FCT's recent rally sustainable? The answer depends on a variety of factors, including the company's ability to manage its debt levels, maintain its high occupancy rates, and continue to execute on its strategic initiatives. While there are certainly risks to consider, FCT's strong financial performance and strategic acquisitions suggest that the trust is well-positioned for long-term growth. Investors should carefully consider these factors when evaluating FCT's stock price and potential for future growth.