Frasers Property Limited Financial Analysis – Net Profit Growth of 76.2%

Business Description

Frasers Property Limited is a Singapore-based company involved in investment holding and real estate development. The company operates through several business segments, including:

• Singapore: Residential, retail, and commercial properties.
• Australia: Residential, retail, and commercial properties.
• Industrial: Industrial, logistics, and commercial properties in Australia and continental Europe.
• Hospitality: Hotels and serviced apartments.
• Thailand & Vietnam: Industrial, residential, retail, hospitality, and commercial properties.
• Others: Properties in China and the UK.

Industry Position and Market Share

Frasers Property operates in a competitive real estate industry, with significant presence in Singapore, Australia, and other geographic regions. Its competitors include other major property developers and real estate investment trusts (REITs). The company holds a substantial market share in the regions it operates, supported by a diversified property portfolio.

Revenue Streams and Competitive Advantage

The company’s revenue streams include property sales, rental income, hotel income, and management fees. Frasers Property’s customer base is diverse, ranging from residential buyers to commercial tenants. Its competitive advantage lies in its extensive geographic footprint, diversified property portfolio, and strategic partnerships.

Income Statement Analysis

For the fiscal year ended 30 September 2024, Frasers Property reported:

• Revenue: \$4,215 million, a 6.8% increase from the previous year.
• Profit Before Interest and Tax (PBIT): \$1,352 million, a 3.0% increase.
• Net Profit: \$519.5 million, a 76.2% increase from \$294.8 million last year.

Key factors driving these results include contributions from residential projects in Australia and China, and fair value gains from industrial and logistics properties in Australia.

Balance Sheet Analysis

As of 30 September 2024, key balance sheet highlights include:

• Total Assets: \$39,637 million.
• Total Liabilities: \$22,167 million.
• Net Assets: \$17,470 million.
• Net Debt: Increased from \$13,802 million to \$14,571 million.

The net debt to total equity ratio increased from 75.8% to 83.4%, primarily due to redemption of perpetual securities and capital expenditure.

Cash Flow Statement Analysis

For the fiscal year ended 30 September 2024:

• Net Cash from Operating Activities: \$1,244 million.
• Net Cash used in Investing Activities: \$339 million.
• Net Cash used in Financing Activities: \$847 million.

Significant expenditures included investment in properties and repayment of borrowings, while significant cash inflows were from bank borrowings and disposal of investment properties.

Dividend

The company proposed a first and final dividend of 4.5 cents per share, consistent with the previous year, amounting to \$176.7 million.

Key Findings

Strengths

• Strong revenue growth driven by residential projects in key markets.
• Diversified property portfolio across different geographic regions.
• Significant increase in net profit by 76.2%.
• Consistent dividend payout.

Risks

• Increased net debt and higher cost of debt.
• Potential impact from geopolitical tensions and economic uncertainties.
• Fair value losses from commercial properties in the UK and Australia.

Recommendations

If Currently Holding the Stock

Investors who currently hold Frasers Property Limited stock should consider retaining their investment. The company shows solid revenue growth, consistent dividends, and substantial net profit increase. However, they should monitor the company’s net debt levels and economic conditions closely.

If Not Currently Holding the Stock

Potential investors may consider investing in Frasers Property Limited due to its strong financial performance, diversified portfolio, and consistent dividend payout. However, they should be cautious of the higher net debt and potential economic risks.

Report Date

The report is dated 13 November 2024 and covers the financial year ended 30 September 2024.

Special Actions to Improve Profitability

The company has been active in managing its cost of funding through hedging and remains focused on productivity improvements. It has also been involved in strategic capital recycling and capital partnership activities to optimize returns and sustain value.

Disclaimer

This analysis is based on the financial statements provided and should not be taken as financial advice. Investors are advised to conduct their own research or consult with a financial advisor before making investment decisions.