This despite FCL in the second quarter ended March posting a 42.2% decline in earnings to $71.2 million from a year ago on lower sales.
Group revenue in 2Q17 fell 21.4% y-o-y to $706 million, mainly due to the absence of contribution from the Twin Fountains executive condominium in Singapore, which was completed in the corresponding period last year.
(See: Frasers Centrepoint sees 42% fall in 2Q earnings to $71 mil)
On a half-year basis, however, FCL’s results were in line with expectations.
“FCL’s 1H17 net profit grew 17% y-o-y to $259 million, making up 47% of the street’s full-year forecast,” says DBS lead analyst Rachel Tan in a Friday report.
On top of this, she notes that strong sales recorded at FCL’s Seaside Residences have yet to be included in its results.
Tan believes FCL’s valuations remain attractive as the stock is still lagging behind other large-cap developers.
FCL is trading at 0.8x P/NAV, compared to peers average of close to 1x P/NAV. This implies that FCL’s “upcoming Singapore projects have been broadly overlooked,” she adds.
In addition, Tan notes that FCL’s dividend yield of close to 5% remains the highest among the Singapore developers.
“With the strong sales volume seen in the recent property launches, management believes this could be an indication of Singapore property market bottoming out,” says Tan.
“Given the development pipeline in Singapore in tapering off and management’s positive view on the Singapore property market, we expect the group to remain on a lookout for new land sites either in upcoming government land sales (GLS) or en bloc,” she adds.
As at 4.21pm, shares of Frasers Centrepoint are trading half a cent lower at $1.86.
