In a report released today, Darren Chan from Phillip Securities maintained a Buy rating on Frasers Centrepoint, with a price target of S$2.44.
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Darren Chan has given his Buy rating due to a combination of factors that highlight the strong performance and potential of Frasers Centrepoint. The company’s retail portfolio boasts an impressive occupancy rate of 99.9%, which not only enhances its negotiating power in lease agreements but also indicates robust demand for its spaces. This high occupancy is supported by a low occupancy cost, providing room for rental growth and contributing to expected positive rental reversions in the coming fiscal year.
Additionally, the company’s financial health is bolstered by a declining cost of debt, with a significant portion of its debt hedged at fixed rates, minimizing exposure to interest rate fluctuations. The strategic acquisition of Northpoint City South Wing is anticipated to further strengthen its portfolio. Moreover, the limited upcoming retail supply in the market supports favorable supply-demand dynamics, which are expected to sustain rental growth. These factors, combined with a stable distribution yield and government support measures, underpin the Buy rating.
In another report released on July 25, DBS also maintained a Buy rating on the stock with a S$2.75 price target.