Wednesday, October 23, 2013

FCT - Q4 FY13 Results

In case anyone is wondering why FCT share price did not gap up after it announces its results despite the record high 2.98 cents/share, it is because of the relatively poor operational performance in the 4th Quarter. 

In fact, Net Property Income fell 5% for the quarter. 

The main reason why the distributable income was up was due to 2 factors. First, there was seemingly higher distribution from its overseas joint associates Hektar Reits. Second, the company dishes out the cash they had retained in the earlier half of the year. In other words, the payout ratio is more in the 4th Quarter.

Management for FCT has a record of increasing its DPU year after year and rewarding shareholders well. From the operational point of view, the renewal lease for 34% of CausewayPoint portfolio occupany next year would boost a positive rental revision for the NPI and offset any weaknesses in their other malls.

I mentioned last year that there was a high chance FCT would not be injecting Changi City Point this financial year and I was proven right despite the hypes by the analyst since a year ago. Going back to this, I think the time is ripe now for an injection into FCT portfolio. There was pressure to keep the operational performance going with an increasing DPU to reward shareholders. And the pressure to increase DPU next year without the injection of Changi City Point seems improbable. Given the low gearing it has right now, I think the management would see this as a good timing and opportunity for all parties.

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