OCBC Investment Research raised its target price on FrasersCommercial Trust to S$1.31 from S$1.23 and maintainedits 'buy' rating, citing the company's possible debt reduction,an expected rise in income and attractive valuation.
Frasers units were up 0.4 percent at S$1.16 on Tuesday. Theunits have increased 58 percent so far this year versus the 27percent gain in the FT ST Midcap Index .
With the recent sale of its KeyPoint property to BayfrontVentures Pte Ltd for S$360 million ($292.7 million), Frasers islikely to sit on net proceeds of S$357.8 million and book in again of S$72.8 million, OCBC said.
OCBC noted that Frasers is likely to use the bulk of thesale proceeds to redeem half of its series A convertibleperpetual preferred units and reduce its existing debt.
Frasers is also expected to gain from interest savings as aresult of the early refinancing of its S$500 million term loanfacility at favourable borrowing margins, OCBC said.
It added that Frasers' acquisition of the balance 50 percentinterest in Caroline Chisholm Centre and direct tenant leases atChina Square Central are likely to contribute positively to thecompany's rental income.
OCBC said the stock was trading at an "attractive"price-to-book ratio of 0.87 times.
1037 (0237 GMT) (Reporting by Eveline Danubrata in Singapore;email@example.com)($1 = 1.2301 Singapore dollars)(Editing by G.Ram Mohan)
Keywords: MARKETS SINGAPORE STOCKSNEWS/FRASERSCOMMERCIALTRUS