Results Analysis: Barbell strategy playing out

  • FY21 results supported by gains from industrial & logistics portfolio offset by lower recognition for development properties and provisions. Increased FY21 dividend.
  • Key positives: i) FY21 sales volume doubled y-o-y, ii) industrial and logistics portfolio remains strong, iii) gearing reduced to normalized level, iv) raised FY21
  • Key negatives: i) Australia commercial & retail occupancy at c.80%, ii) provisions made for Riviere project, iii) hospitality portfolio remains challenging but stabilising 
  • Maintain BUY; TP of S$1.70
Key Results2HFY211HFY21h-o-h2HFY20y-o-yFY2021FY2020y-o-y
Attributable Profit (ex FV and EI)90310-71%11680%40022974%
Attributable Profit557276102%(46)-1319%833188343%
PBIT (ex-gain on the change in use)59047923%45530%1,0691,246-14%
Attributable Profit (ex-gain on the change in use)559232330%(46)-1323%582188209%
Gearing73.7%97.6%-23.9 ppt99.3%-25.6 ppt73.7%99.3%-25.6 ppt
Av cost of debt2.3%2.3%0 ppt2.3%0 ppt2.3%2.3%0 ppt
DSCR440 x31 x431 x

(+/-) FY21 results supported by gains from industrial and logistics portfolio offset by lower recognition of development properties and challenging hospitality market; gearing normalised to c.74%; raised FY21 dividend to 2 Scts vs 1.5 Scts

  • FPL recorded FY21 net profit of S$833m vs S$188m in FY20 mainly due to c.s$1bn of fair value change and gain on disposal of investment properties (including S$356m gains from change in use of logistics assets to investment properties). Net profit (ex-FV and EI) was S$400m vs S$229m in FY20. Core net profit is estimated to be c.S$150m.  
  • Revenue grew 5% y-o-y but PBIT (ex-gain on change in use) -14% y-o-y mainly due to lower recognition / settlement of development properties (from all markets except Australia), project provision for Riviere project in Singapore and hospitality segment which were impacted by the pandemic.  
  • On segment basis, FY21 development properties PBIT fell 54% y-o-y. All countries saw decline with Singapore (-137% y-o-y) and China saw the largest decline (-77% y-o-y) due to timing on settlement of projects and provisions. FY21 recurring income (ex-gains) is estimated +15% y-o-y were mainly from industrial & logistics portfolio, commercial and fee income while retail and hospitality portfolio remained challenging.  
  • Gearing reduced further to 73.7% vs 97.6% in 3QFY21. Average cost of debt remained stable q-o-q at 2.3%.
  • Raised full year divided to 2 Scts vs 1.5 Scts in FY20. 
Key highlights4QFY213QFY21q-o-q4QFY20y-o-y
– SG94.9%93.9%1 ppt 88.4%6.5 ppt 
– AU79.8%78.9%0.9 ppt 92.3%-12.5 ppt 
– SG92.3%93.5%-1.2 ppt 92.8%-0.5 ppt 
– AU79.2%80.6%-1.4 ppt 94.3%-15.1 ppt 
– TH (retail & office)91.4%90.4%1 ppt 84.9%6.5 ppt 
– VN86.6%  92.6%-6 ppt  
– AU100.0%100.0%0 ppt 100.0%0 ppt 
– EU98.0%97.0%1 ppt 99.0%-1 ppt  
– TH (warehouse)89.8%84.4%5.4 ppt 83.5%6.3 ppt 
– TH (factory)77.9%76.5%1.4 ppt 77.2%0.7 ppt 
– UK (business parks)90.6%87.9%2.7 ppt 89.1%1.5 ppt 
RevPAR (S$)     
– North Asia56.5055.901.1%69.20-18.4%
– APAC ex North Asia98.20101.10-2.9%121.30-19.0%
– Europe92.7055.7066.4%98.00-5.4%
– North Asia47.1%44.9%2.2 ppt52.9%-5.8 ppt
– APAC ex North Asia74.4%76.0%-1.6 ppt72.1%2.3 ppt
– Europe38.7%27.4%11.3 ppt49.7%-11 ppt
Development PropertiesFY21FY20y-o-y
Property sales (cumulative)10,2195,15298.4%
– SG47759708.5%
– AU2,7871,65168.8%
– CH172356-51.7%
– TH6,7833,086119.8%
Unrecognised sales1.81.428.2%
– SG0.20.1100.0%
– AU1.31.118.2%
– CH0.20.1100.0%
– TH0.10.1-3.8%

(+) FY21 sales volume doubled y-o-y, from all countries except China; Parc Greenwich EC was best-selling EC launch to-date

  • FY21 showed sales volume doubled y-o-y to 10.2k units. Sales in all countries showed strong growth except China. 
  • Riviere (Singapore residential) sales inched up to  36.3% vs 27.9% in 3QFY21 and 12.5% in 4QFY20 and on track to complete in 1HFY23. 
  • Unrecognised sales stood stable at S$1.8b, Australia comprises the largest component at S$1.3b
  • Parc Greenwich EC at Fernvale Lane launched on 11 Sep 21 and achieved 65% of sales during the launch weekend, best-selling EC launch to-date. Redevelopment of Bedok Point mall is on track.
  • In Australia, FY21 settlements meet target at c.2.4k units while planned launch at 2.3k in FY21 surpassed target of 2k. 

(+/-) Investment properties were generally stable with some pockets of improvement; logistics portfolio remained to be very resilient.

  • Commercial and retail occupancies were relatively stable q-o-q except Australia commercial portfolio occupancy fell to slightly below 80% at 79.2% from 80.6% in 3QFY21
  • Occupancies of commercial and retail portfolio were relatively stable ranging from 90% to 95% except Australia office and retail portfolio, as vacancies at Rhodes Corporate Park remains.
  • Logistics portfolio remains stable. Australia maintained its full occupancy while Europe occupancy continue to creep up to 98% vs 97% in 3QFY21. 
  • UK business parks occupancy improved marginally to 90.6% vs 87.9% in 3QFY21 (+2.7ppt). 

(+) Hospitality appears to have stabilised with Europe showing signs of improvement post reopening.

  • Hospitality portfolio continues to be impacted by COVID-19 pandemic and travel restrictions but portfolio appears to have stabilised.
  • Occupancy and RevPAR were relatively stable q-o-q except Europe which has seen some improvement post the reopening.  
  • Europe’s occupancy improved close to 40% (+11.3 ppt q-o-q) and RevPAR increased 66% to S$92.70.
  • Expect to see progressive recovery as more travel borders open.

(+) AEIs / Development updates – continue to expand and invest into industrial and logistics portfolio

  • Singapore – ongoing redevelopment of Bedok Point mall; 
  • In Australia – ongoing development of 354-unit built-to-rent (BTR) pilot project in Fortitude Valley, Brisbane with expected completion in 4QFY24
  • Industrial & logistics – currently developing 11 projects with S$751m GDV with planned completion in FY22 and FY23 (Australia 91%, Netherlands 9%). Australia development properties comprises c.43% of GDV are development assets contracted for sale to third parties.
  • Industrial & logistics continue to see strong structure growth and management will likely continue to invest in this asset class. 
  • Despite the strong residential sales pick-up, management remains cautious on the market and will likely expand in a measured manner.
  • Management continue to embark on its asset recycling strategy to realise the value of its assets. Northpoint City (South Wing) continue to show resilient performance with occupancy at above 90%. The mall is currently undergoing its first lease renewal cycle.