Brokers' take: FLCT could replace Jardine Strategic in STI, says CGS-CIMB

FRASERS Logistics & Commercial Trust (FLCT) is the next likely candidate to replace Jardine Strategic Holdings in the FTSE Straits Times Index (STI), based on free-float and market capitalisation, CGS-CIMB said.

As at March 5, FLCT's free-float market capitalisation was S$3.2 billion. If included, the research team estimates FLCT's weight in the STI to be 1.1 per cent.

Its projection came after Jardine Matheson Holdings said on Monday that it will acquire the 15 per cent of Jardine Strategic it does not already own in a proposed acquisition valued at about US$5.5 billion. Upon completion, Jardine Matheson will be the single holding company for all its Jardine subsidiaries.

In a research note on Monday, CGS-CIMB said it likes FLCT for its exposure to the logistics warehouse sector, which will continue to ride on the e-commerce uptrend, as well as the trust's visible inorganic growth potential and income resilience.

The research team has an "add" call on FLCT, with a target price of S$1.57. The counter is one of CGS-CIMB's Singapore top picks.

Units of FLCT closed down 1.46 per cent at S$1.35 on Tuesday.

Other companies on the STI reserve list are Frasers Centrepoint Trust (FCT), Keppel Reit, Suntec Real Estate Investment Trust and NetLink Trust.

FCT - which has a free-float market capitalisation of S$2.5 billion - could be the next candidate in line after FLCT, followed by Keppel Reit, based on a three-month average daily value of S$12.1 million.

FCT was added to the STI reserve list after a review on March 4. The counter is also one of CGS-CIMB's top picks in Singapore for its faster recovery from the Covid-19 impact versus peers, given the Reit's pure exposure to suburban malls.

The next STI review will take place on June 3, 2021, CGS-CIMB noted. Its end-2021 target for the index remains at 3,140 points, based on a 12-month forward price-to-earnings ratio of 14.2 times.