Broker's take: RHB downgrades Frasers Centrepoint Trust as positives priced in

RHB Research on Thursday downgraded Frasers Centrepoint Trust (FCT) to "neutral", saying that its recent share price rally has factored in the upside.

"The weak retail demand, higher incoming retail supply and rising e-commerce also remain as threats," said RHB, which raised the target price of S$2.24 from S$2.22 on the trust. It closed at S$2.21 on Wednesday.

The brokerage said that while FCT's suburban malls continued to register "healthy" increases in rental, the rental growth did not come with higher shopper traffic and tenant sales, which continued to decline.

"Acquisitions could be the next catalyst," added RHB, saying that FCT's gearing remains relatively low at 29 per cent, translating to about S$500 million in debt headroom.

"We believe Waterway Point, which is one-third owned by sponsor Frasers Centrepoint, is a good fit to its portfolio in the near term," RHB said.

"FCT is also looking at third-party assets in Singapore and could potentially expand to Australia at an opportune time."

The stock has risen about 16 per cent year to date.