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PR Newswire
12-08-2014, 10:16 PM
FCL - Frasers Charoen Legend - Live Like U Mean It
Live Like U Mean It!
FCL was listed on 9 Jan 14. Since then FCL has wasted no time in building its track record as a listed company (even though it was a significant contributor to former parent F&N). Final dividends of 1.73 cents meant for FY9/13 was paid shortly after listing with a further 2.4 cents interim paid for FY9/14 in May 14.
FCL spinoff his 50% in Changi City Point (retail) into FCT in March while the much touted hospitality trust, FHT was established and floated in July 14 alongside the solid backing of parent TCC Assets. FHT joined FCT and FComm to complete FCL's comprehensive suite of REITs which will enable FCL to attain optimal efficiency of capital employed via recycling of matured assets when opportunity arises.
FCL's core development division continued its selective replenishment of landbank in the tough Singapore residential markets while its commercial property and hospitality units also added on new development assets (Cecil Street office development) and established assets (Sydney Wentworth Sofitel) during the last 7 months of listing.
Grab Life By The Tusks!
In early June, FCL stunned both the Singapore and Australian markets with a full cash offer for Australand (ALZ), the former "unwanted child" of the Capland Group. FCL effectively outbidded Stockland (an well established Australian integrated property company), who had been pursing ALZ for several months with the backing of the ALZ board on its fair and reasonable offer.
In ALZ, FCL is purchasing an established platform of investment properties (around 61% of total asset value comprising high quality industrial properties and offices in prime locations across Australian capital cities) and residential landbank (39%). As the Australian property market is a well regulated one with long gestation period, FCL's experience Down Under alongside with ALZ's proven track record, FCL will see immediate earnings accretion from the takeover.
Funding Concerns For ALZ Overplayed
In the light of the mammoth purchase of ALZ totalling A$2.6bn, market watchers are mainly pre-occupied with the immediate impact to FCL's gearing levels. Given that Towkay Charoen has came away with a much bigger prized catch in F&N, these pessimists appear to have under-estimated Towkay's ability in wheeling and dealing:
i) FCL continued to be backed by locked-in sales globally totalling S$2.56bn that will be progressively booked over the next 3 years;
ii) Strategic and established partners such as Sekisui House (http://www.sekisuihouse.com.au/) which is the 2nd largest in Japan that will be more than willing to be the future partner in FCL-ALZ projects
iii) Cherry picking and streamlining of ALZ's quality investment properties portfolio via outright sale or recycling via FCL's suite of REITs
iv) new share placement that will attract potentially strong institutional appetite (once the ALZ roadmap is clearer) that addresses FCL's tight free float (TCC and Thai Bev collectively owns 87.9% of FCL)
v) current gearing of 0.4x that can be moved towards a higher but optimal level
vi) in view of the above, highly unlikely chance of a out-right cash call by rights issue.
Give Mates More Than 100%
Towkay Charoen's deal making capability that started with F&N looks set to continue at FCL. FCL's proven track record of tailoring business strategies that based on local knowledge and industry conditions have been well demonstrated via its strong earnings since its listing as a separate property entity. Given the ongoing anti-speculative measures on Singapore property market, FCL's timely execution of risk-calculated expansion plans has put in a strong leadership position amongst listed property big-wigs on SGX.
Clear earnings visibility and dividend policy will certainly give mates more than 100%. Stay tuned for more signposts for value creation in the months ahead.