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Frasers Centrepoint Trust (FCT) – A Defensive Suburban Play

I decide to find a home to park some of my cash and have chosen Fraser Centrepoint Trust. The reason being:

  • Resilient Suburban Malls in town center of densely populated Singapore Estate that is in limited supply
  • Forward DPU of greater than 11 cents for a 6% yield
  • Good Management

By no means is it cheap after under going the recent correction. If I believe my capital is under threat with something that I have not foresee I would likely pare down, so don’t follow blindly.

I came out with the following slides to be clear about my thesis. I will keep updating the slides if I find more thoughts on the subject.

It talks about

  • Key Investment Objectives
  • Business (Strength, Weakness, Threats and Opportunities)
  • Valuation
  • Risk Management

Would well come inputs from tenants and shoppers alike.


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Monday 8th of July 2013

Hi Kyith,

Been following your blog since my days in Poly (Undergraduate now), I was wondering if there is any reason why you favour FCT than CMT?

Was it due to the history of rights issue by CMT or was it some other reasons? Fundamentally, CMT did not fair too badly compared to FCT, in fact if we were to compare the payout ratio, free cashflow yield and Dividend yield, CMT seems to be a better choice.

I could have missed some considerations in my analysis, would appreciate if you could share your views.

Thanks, Ben.

Dividend Warrior

Saturday 6th of July 2013

I frequent Causeway Point and NorthPoint. The supermarkets, F&B outlets, IT stores and hair salons are doing well. Especially F&B. Starbucks, Coffee Bean, Mac, KFC, food courts etc. are always packed. Clothing & fashion is not doing so well though. Furthermore, the government is going to develop the land around the Woodlands MRT station. Republic Poly is located within walking distance too. Human traffic is really good at CWP.

However, management did mention that they are looking to acquire Changi City Point in 2014. Looking at the current gearing level, there will most probably be rights issues or private placements to fund this potential acquisitions. Just take note.


Sunday 7th of July 2013

Hi Dw I went np just now and at 4pm the fashion places really isn't doing well compare to the food.

Give me a question whether they can than another mall next


Sunday 7th of July 2013

Hi DW, thanks for the share. i also have the same thoughts on Fashion and clothing but do you see the same trend on CMT or vivo's malls? I dont think so. perhaps FCT can only get the lesser retailers.

Incidentally clothing is the one that is most affected by the online retailing trend. Still without things like this it will not keep the people at the eateries.

Will there be every chance another mall comes up? I would think so.

in my slides i did highlight Changi City and that the management have always indicate their preference NOT to do a rights issue but a private placement and debt.

but it would seem you still have a preference for CMT


Saturday 6th of July 2013

Retail is definitely defensive, but I always thought FCT was too richly valued (premium over NAV, so no margin of safety), especially since they have a lot of leasehold properties, aka "self liquidating assets".


Saturday 6th of July 2013

Thanks for the opinion. I agree with you that on a premium over NAV, it doesn't look cheap. Hence i say, don't blindly follow and buy.

I think most REITs in Singapore are leasehold nowadays and that they are self liquidating assets. However retail properties probably have a long lease period (>76 years for Causeway point e.g.)

Would like to hear why you say retail is definitely defensive. thanks alot.

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