Singapore Daily: Comprehensive Analysis of Key Listed Companies

UOB Kay Hian – November 7, 2024

Frasers Logistics & Commercial Trust (FLT SP)

Frasers Logistics & Commercial Trust (FLT) has shown robust performance in 2HFY24, driven primarily by its logistics properties. The company achieved an impressive positive rental reversion of 39%, 58.1%, and 31.1% for logistics properties in New South Wales, Victoria, and Queensland, respectively. FLT has backfilled vacant spaces and restored occupancy for its logistics properties in Australia back to 100%.

2HFY24 Results

FLT reported revenue of S\$230.6 million, up by 8.4% year-on-year, supported by positive rent reversions, rental escalations, and acquisitions. However, the net property income (NPI) grew by only 3.7% due to a 45.6% increase in finance costs. Distributable income decreased by 5.1% to S\$124.9 million, and the distribution per unit (DPU) fell by 5.7% to 3.32 Singapore cents.

Operational Highlights

FLT’s logistics properties in Australia maintained full occupancy, with the company successfully backfilling vacant spaces in Victoria and Queensland. In Singapore, occupancy at Alexandra Technopark (ATP) was stable at 85.9% in 4QFY24, with efforts underway to backfill remaining vacant spaces.

Financial Metrics

FLT’s aggregate leverage remained low at 33.0%, with an interest coverage ratio of 5.0x. The company’s significant debt headroom of S\$793 million supports its ability to grow via acquisitions. FLT provides a FY25 yield of 6.3%, maintaining a BUY rating with a target price of S\$1.44.

Singapore Post (SPOST SP)

Singapore Post (SPOST) reported strong 1HFY25 results, with overall revenue up by 20.0% year-on-year to S\$992.4 million. Despite this growth, the results missed expectations due to higher-than-expected interest costs and softer-than-expected performances from the Singapore letter & mail business and the Australian 3PL business.

1HFY25 Results

SPOST’s operating profit increased by 62.9% to S\$51.2 million, driven by the consolidation of Border Express (BEX) in Australia and higher profits from the Singapore business due to the postal rate hike in 3QFY24. The company declared a higher interim dividend of 0.34 Singapore cents, implying a 30% core PATMI payout ratio.

Operational Segments

The Singapore postal business saw a 12.4% increase in revenue, driven by a sharp rise in letter & mail postal revenue. The property segment reported a stable performance with a 11.7% increase in operating profit due to improved rental income. The international postal business faced ongoing headwinds, with a 26.8% decline in revenue but an increase in operating profit due to cost-efficiency initiatives.

Financial Metrics

SPOST’s net profit for FY25 is forecasted to be S\$61.9 million, with an upward trend expected in the coming years. The company maintains a BUY rating with a target price of S\$0.61, indicating a potential upside of 17.8%.

SIA Engineering (SIE SP)

SIA Engineering (SIAEC) reported a core net profit of S\$70.4 million for 1HFY25, a 20.4% increase year-on-year. Despite this growth, the earnings were slightly below expectations, forming 45% of the full-year forecast. The company’s operating profit was impacted by supply chain constraints and gestation costs related to new business expansion initiatives.

1HFY25 Results

SIAEC’s revenue increased by 12.1% to S\$576.2 million, with a core EBIT of S\$4.6 million. Contributions from joint ventures and associates were in line with expectations, totaling S\$58.6 million. The company declared an interim dividend of 2 Singapore cents, unchanged year-on-year.

Operational Highlights

Flight activities at Changi Airport reached 96.0% of pre-pandemic levels, supporting the growth of SIAEC’s line maintenance business. The company is actively expanding its production capacity and engineering capabilities through various initiatives, including the development of an airframe MRO facility in Subang, Malaysia.

Financial Metrics

SIAEC’s net cash position stood at S\$488 million as of end-1HFY25. The company maintains a BUY rating with a target price of S\$2.70, offering a potential upside of 10.3%. The stock trades at 17.5x FY26F PE, with a dividend yield of 4.3% for FY25.

CapitaLand Investment (CLI SP)

CapitaLand Investment (CLI) announced a 3Q24 business update, with revenue slightly lower than expected at S\$2.26 billion, up by 1% year-on-year. The company exceeded its capital recycling target of S\$3 billion, having divested S\$4.1 billion of assets year-to-date.

9M24 Revenue Breakdown

CLI’s lodging management revenue increased by 0.8% to S\$251 million, driven by higher RevPAU and new units opened. Commercial management revenue grew by 14.2% to S\$281 million, while listed fund management revenue declined by 1.4% to S\$218 million. The company’s real estate investment business saw a 1.6% decline in revenue due to asset divestments.

Operational Highlights

CLI’s commercial and lodging management segments performed well, with 9M24 revenue up by 12% and 14% year-on-year, respectively. The company signed up more than 10,200 units and opened over 7,200 units in 9M24. CLI also raised S\$1.6 billion in private capital year-to-date, with plans to raise more capital for thematic funds targeting various regions and sectors.

Financial Metrics

CLI’s net profit for FY24 is forecasted to be S\$709 million, with a positive outlook for the coming years. The company maintains a BUY rating with a lower SOTP-based target price of S\$3.85, offering a potential upside of 32.3%. The stock trades at 21.3x FY24 PE, with a dividend yield of 2.8% for FY24.

Conclusion

The comprehensive analysis of Frasers Logistics & Commercial Trust, Singapore Post, SIA Engineering, and CapitaLand Investment reveals strong operational performance and promising financial metrics. Investors are advised to consider these companies for potential investment opportunities, with positive growth prospects and attractive dividend yields.