Frasers Logistics Earnings: Results Miss on Currency Headwinds; Maintain Fair Value Estimate

Frasers Logistics and Industrial Trust’s, or FLCT’s, first-half fiscal 2023 (ending September) revenue and net property income declined by 11.7% and 14.0%, respectively, due to the divestment of Cross Street Exchange in March 2022 and foreign currency headwinds. These were slightly below our expectations, making up 47% and 46% of our full-year estimates for revenue and net property income, respectively. The miss is largely due to larger-than-expected foreign translation losses. We updated our model accordingly and our fiscal 2023 distribution per unit, or DPU, is lowered to SGD 0.0718, implying a dividend yield of 5.3% based on the last closing price of SGD 1.36. Our fair value estimate remains unchanged at SGD 1.24 per unit. Although we like the trust for its strong balance sheet and exposure to the robust Australian logistics and industrial market, we think the shares are unattractive currently and investors should wait for a better entry price.