RHB lifts FCT target price on improved H2 earnings, asset enhancements, lower interest rates
DBS and RHB maintain their ‘buy’ calls on FCT
[SINGAPORE] RHB raised its target price for Frasers Centrepoint Trust (FCT) and maintained its “buy” rating, citing steady H2 earnings alongside tailwinds from asset enhancements and falling interest rates.
This comes as FCT on Thursday (Oct 23) posted a higher H2 distribution per unit of S$0.06059, as its revenue rose 14.3 per cent to S$205.2 million and net property income grew 12 per cent to S$144.3 million.
RHB on Friday lifted its target price for FCT from S$2.50 to S$2.70 – 10.2 per cent above its latest S$2.45 closing price on Thursday – given its “steady performance” for its second half ended September. DBS also maintained its “buy” call for the trust and kept its target price unchanged at S$2.75.
Pointing to FCT’s “stable” H2 results, RHB analyst Vijay Natarajan said: “(The) key focus for FY2026 will be on unlocking value via planned asset enhancement initiatives (AEI), with FCT continuing to benefit from declining interest rates. Healthy rent reversions are set to continue, backed by higher tenant sales.”
Natarajan added that FCT remains one of its top picks for its high-quality, pure-play Singapore suburban mall exposure.
Similarly, DBS highlighted that FCT has been a “sector darling for the past few years”, with its catalysts remaining resilient and poised to deliver earnings growth for FY2026.
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However, with the upcoming Rapid Transit System (RTS) posing uncertainties for northern-bound malls in Singapore, DBS noted that the market could take a “more measured approach” while weighing the RTS’ eventual impact on FCT.
“We do not envision a drop in earnings, but market sentiment may see a rotation out as investors adopt a wait-and-see approach to fully assess the RTS’ impact on northern malls and FCT’s portfolio,” the bank said.
Asset enhancements, lower interest rates as tailwinds
DBS said overall portfolio valuations for FCT have been “broadly stable”, with a 1.2 per cent increase led by the uplift at Hougang Mall, as valuers priced in the ongoing AEI spending.
RHB noted that Hougang Mall’s AEI is on track for completion by September 2026; the works will increase its net lettable area by around 11,000 square feet (sq ft).
“More than 80 per cent of the additional space has already received pre-commitments, with FCT on track to achieve around 7 per cent return on investment on its estimated S$51 million capital expenditure,” RHB’s Natarajan said.
This will likely be followed by an AEI at Nex mall. The works there are in advanced stages of planning, and could increase gross floor area by around 60,000 sq ft. Northpoint City, on the other hand, is expected to benefit from “better integration and value unlocking”, following FCT’s acquisition of its South Wing in May, Natarajan said.
Moreover, lower borrowing costs could provide tailwinds for FCT, he added.
RHB noted that interest costs are down 60 basis points year to date at 3.5 per cent in Q4 FY2025, with management guiding that interest costs will stand at 3.3 to 3.4 per cent in FY2026.
Minimal impact from Cathay exit
The income decline from Cathay Cineplexes’ exit from FCT’s portfolio was largely offset by better performance across other malls, Natarajan said.
He noted that portfolio occupancy dipped 1.8 percentage points as a result of the distressed cinema chain shuttering operations at Causeway Point and Century Square, where it previously was an anchor tenant.
Likewise, DBS believes that operations will continue to be “rosy” for the trust despite the headline drop in occupancy, amid healthy tenant trading.
Both banks observed that tenant sales have risen.
DBS said: “Notably, tenant sales this quarter saw an uplift compared to the first nine months of FY2025 from the launch of SG60 vouchers, which we believe will help sustain consumer spending momentum at FCT’s malls into the next financial year.”
Moreover, a potential upside could come from the successful repositioning of the space formerly used by Cathay Cineplexes, RHB said. It noted that FCT is currently exploring replacement tenants.
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