Portfolio Update: Purchased Frasers Centrepoint Limited

Since after almost 2 months from the last post about my observations on Waterway Point, 穷小子 finally managed to get a small position today.

The current book value is about $2.66. With based on today closing price of $1.52, I am quite comfortable with the 0.57 of the book value.

As mentioned in the previous post, there are 2 minor concerns which need to be considered before making the buy call. Low liquidity and High Debt.

Low liquidity
The low liquidity is not much of a concern to me. Having an intention to hold it for long-term, and since is a small position only, quite confident that I will be able to sell it at my target price in the far future.

High Debt
Based on the latest quarter report, the Net Debt/Equity is 87.5%, an increased from the previous quarter of 83.8%. 穷小子 is not that good in his fundamental analysis, but this seems to be a minor red flag. Looking forward to see a lower ratio in the next report with the recent IPO of Frasers Logistics & Industrial. Of course this shouldn't be the only measurement to gauge a company, will check on their upcoming report and keep track of it.

On the side track, notice that the 2-year low price is actually at $1.40 only. Did a simple maths calculations.
If the price really came down to this price (*touch wood*), it will be a 7.9% drop. With today closing price at $1.52, it will have a dividend yield of 5.66%. Hence, 2 years of dividend will be sufficient to cover it.
This purchased is about 4.5% of 穷小子's total portfolio only. Shall understand further on the upcoming report before adding any new positions.

Not to confused, its with the symbol TQ5

Frasers Centrepoint Limited - Will it gets better with the opening of Waterway Point and Safra Punggol?

Frasers Centrepoint Limited (FCL) was never in my watchlist until I visited Punggol Waterway Point. Most of the malls are managed by Frasers Centrepoint Trust (FCT), who is listed in Singapore Exchange too. *Do not confused between these two.*

I don't stay at Punggol, but I would go that area about 3 - 4 times each month. There are a lot of new HDB BTO around the area in the recent years, but it is not crowded, at least at Punggol station.

Waterway Point

With the opening of Waterway Point in Jan 2016, the game changes. Suddenly there is a surge in crowds. From what I can see, Punggol resident are hungry for shopping malls. Waterway Point reported that have it has 90% of tenants occupancy for its soft launch, with major anchor tenants such as NTUC Fair Price Finest (24 hours) and Shaw. Not only that, it has Timezone arcade for the kids, variety of cafes and restaurants (which is always long queue) for the teens, adults and families. I can say that it just have all the magnets to attracts the residents from all walks, and of course Daiso, 穷小子 style favourite.
To add on, managed to get Shaw as its tenant is one of the great move by the Frasers Management.
Based on the MRT North East Line, the only one cinema from Punggol to Serangoon is at NEX, Serangoon shopping mall, before the opening of Shaw at Waterway point. I used to stay at Hougang, the residents from the area are hoping for a cinema.

Safra Punggol

Furthermore with the opening of Safra Punggol at Apr 2016, which is less than 1KM away from Waterway Point, adds another plus factor to FCL. Safra Punggol is a different concept from the rest of SAFRA, as it is the first eco-friendly SAFRA club. I can see that the audience which its targeting are mainly young couples and kids, the Splash@Kidz Amaze indoor water playground answers it all. The first three-storey indoor water playground will not only attracts Punggol residents, but also from the whole of Singapore. I went there during the first weekend since it launched, the crowd for the pool was crazy, all the time slots for entry were fully booked till it closed.

I do not know whether my observations would means the stock price will increase, but what I can say is that all of these are plus factors which will bring in crowds, and these are certainly benefits to FCL. Another financial factor is that the price is currently at an estimated of 0.60 of its book value only based on today closing price. In layman term means the price is discounted.
Except that I don't like its high debt ratio and the low liquidity in the stock exchange, other than that, FCL is not bad for a thought.

By the way, I'm not vested in this yet, still waiting for an opportunity. News of US interest rate hike may bring the price down for a good catch. Who knows.