Comprehensive Analysis of Frasers Logistics & Commercial Trust and Its Competitors – November 2024

Date: 7 November 2024

Broker: OCBC Investment Research

Frasers Logistics & Commercial Trust (FLCT)

Frasers Logistics & Commercial Trust (FLCT) has demonstrated a resilient performance in FY24 despite facing some challenges. The distribution per unit (DPU) for the second half of FY24 and the entire fiscal year declined by 5.7% and 3.4% year-on-year, respectively, to 3.32 and 6.80 Singapore cents. This was largely in line with expectations, with the full-year DPU meeting 98.6% of the forecast.

The portfolio rental reversions for 4QFY24 and FY24 were robust at 26.8% and 23.6%, respectively, although the overall occupancy rate slightly dipped to 94.5%. The leverage ratio stood at 33.0%, with an anticipated higher cost of debt in FY25 due to refinancing.

FLCT’s investment thesis remains strong due to its defensive profile, high portfolio occupancy rate, healthy balance sheet, and long weighted average lease to expiry. The management aims to increase the logistics and industrial (L&I) assets under management from 70% to 85% in the long term. The trust also places a significant emphasis on environmental, social, and governance (ESG) aspects, aiming for net zero carbon status by 2050 and consistently ranking high in the Global Real Estate Sustainability Benchmark (GRESB).

For FY25, the forecasted gross revenue is SGD 475.4 million, with a net property income of SGD 345.3 million. The cost of debt is expected to rise to the mid-3% range, leading to a slight cut in the DPU forecast for FY25 by 2.2%. Consequently, the fair value estimate has been adjusted from SGD 1.35 to SGD 1.28.

Key Financial Metrics

• Gross Revenue: SGD 446.7 million (FY24), SGD 475.4 million (FY25E), SGD 500.7 million (FY26E)
• Net Property Income: SGD 322.0 million (FY24), SGD 345.3 million (FY25E), SGD 364.0 million (FY26E)
• DPU: 6.80 S cents (FY24), 6.75 S cents (FY25E), 6.79 S cents (FY26E)
• DPU Yield: 6.5% (FY24), 6.4% (FY25E), 6.5% (FY26E)
• Price/Book Ratio: 0.9 (FY24), 0.9 (FY25E), 1.0 (FY26E)
• Return on Equity: 3.5% (FY24), 4.4% (FY25E), 4.8% (FY26E)
• Gearing Ratio: 33.0% (FY24), 34.0% (FY25E), 34.1% (FY26E)

CapitaLand Ascendas REIT (CAPD.SI)

CapitaLand Ascendas REIT is a prominent player in the real estate investment trust sector, focusing on industrial and business space properties. For FY25, the trust’s gross revenue is expected to reach SGD 475.4 million, with a net property income of SGD 345.3 million. The total return after tax is projected at SGD 188.5 million, with distributions to unitholders amounting to SGD 256.8 million.

Key Financial Metrics

• Price/Earnings: 18.7 (FY25E), 17.5 (FY26E)
• Price/Book Ratio: 1.2 (FY25E), 0.6 (FY26E)
• EV/EBITDA: 19.4 (FY25E), 19.0 (FY26E)
• Dividend Yield: 5.7% (FY25E), 5.8% (FY26E)
• Return on Equity: 6.3% (FY25E), 6.5% (FY26E)

ESR-LOGOS REIT (ESRO.SI)

ESR-LOGOS REIT specializes in providing logistics and industrial space solutions. The trust is anticipated to generate a gross revenue of SGD 475.4 million in FY25, with a net property income of SGD 345.3 million. The total return after tax is forecasted at SGD 188.5 million, and distributions to unitholders are expected to be SGD 256.8 million.

Key Financial Metrics

• Price/Earnings: 18.2 (FY25E), 15.0 (FY26E)
• Price/Book Ratio: 0.9 (FY25E), 0.9 (FY26E)
• EV/EBITDA: 17.5 (FY25E), 16.7 (FY26E)
• Dividend Yield: 7.9% (FY25E), 7.9% (FY26E)
• Return on Equity: 4.8% (FY25E), 6.4% (FY26E)

Keppel DC REIT (KEPE.SI)

Keppel DC REIT focuses on data center properties, catering to the growing demand for digital infrastructure. For FY25, the trust’s gross revenue is projected at SGD 475.4 million, with a net property income of SGD 345.3 million. The total return after tax is expected to be SGD 188.5 million, with distributions to unitholders amounting to SGD 256.8 million.

Key Financial Metrics

• Price/Earnings: 23.8 (FY25E), 22.2 (FY26E)
• Price/Book Ratio: 1.7 (FY25E), 1.7 (FY26E)
• EV/EBITDA: 23.3 (FY25E), 22.4 (FY26E)
• Dividend Yield: 4.2% (FY25E), 4.5% (FY26E)
• Return on Equity: 7.0% (FY25E), 7.0% (FY26E)

Mapletree Industrial Trust (MAPI.SI)

Mapletree Industrial Trust invests in industrial real estate, including data centers and industrial properties. The trust is projected to achieve a gross revenue of SGD 475.4 million in FY25, with a net property income of SGD 345.3 million. The total return after tax is estimated at SGD 188.5 million, with distributions to unitholders forecasted at SGD 256.8 million.

Key Financial Metrics

• Price/Earnings: 17.4 (FY25E), 17.3 (FY26E)
• Price/Book Ratio: 0.5 (FY25E), 0.5 (FY26E)
• EV/EBITDA: 20.1 (FY25E), 19.3 (FY26E)
• Dividend Yield: 5.7% (FY25E), 5.8% (FY26E)
• Return on Equity: 7.3% (FY25E), 7.5% (FY26E)

Conclusion

Overall, the analysis of Frasers Logistics & Commercial Trust and its competitors provides a comprehensive insight into their financial performance and investment potential. Each company has its strengths and areas of focus, with varying degrees of exposure to industrial, logistics, and commercial properties across different regions. Investors should consider these factors along with the associated risks and potential catalysts before making investment decisions.