On April 9, Frasers Property said it will report lower earnings for the six months ended March 2024 versus the year earlier, no thanks to a lower value of its commercial properties in the UK.
This impending round follows just after the company wrote down $446 million in FY2023 for its UK, other European and Australian assets, no thanks to cap rates estimated to have expanded by close to 50 basis points.
This coming round of fair value losses just months after the previous round will raise questions if the last reported fair value losses were truly reflected, says DBS.
DBS says that it had previously flagged that cap rates for UK commercial assets have expanded between 75bps -90bps, which means slightly more downside if 'marked-to-market'.
Overall, DBS is not seeing "marked changes" to Frasers Property's NAV of $2.52 per share as at Sept 2023, given how UK commercial assets make up just around 1% of the company's total assets of $39.8 billion.
Frasers Property closed at 85 cents on April 9, representing a steep discount of 70% off its NAV, close to its record lows.
DBS's current call on this counter is "buy", with a target price of $1.20.
