Frasers Property Limited (FPL): Privatization Proposal and Strategic Analysis
CGS International
May 14, 2025
Frasers Property Limited: Privatization Proposal, Strategic Benefits, and Future Outlook
Overview of the Privatization Proposal
Frasers Property Ltd (FPL) has announced a proposal to privatize Frasers Hospitality Trust (FHT) at S\$0.71 per stapled unit, through its subsidiary Frasers Property Hospitality Trust Holdings Pte Ltd (FPHT). This acquisition excludes the units already owned by FPL (25.59%) and TCC Group Investments Ltd (36.72%). The privatization will occur via a scheme of arrangement [[1]].
- The Scheme Consideration of S\$0.71 per stapled FHT security represents a 36.3% premium over FHT’s 12-month VWAP and 1.11x P/adjusted NAV as of April 2025 [[1]].
- The offer price will be adjusted to include any clean-up distributions to unitholders from the date following its latest financial period to the day immediately before the Scheme becomes effective [[1]].
- The Scheme is subject to shareholder approval at a Scheme meeting and other regulatory approvals. The effective date is projected around late-August 2025, with delisting by early-September 2025 [[1]].
Strategic Benefits for FHT and FPL
This privatization is expected to be a mutually beneficial transaction [[1]].
- For FHT Unitholders: The scheme provides an option to realize their investment at a premium to NAV amid geopolitical tensions, macro uncertainties, and forex headwinds impacting operational and share price performance [[1]]. The cash offer provides certainty in timing and execution [[2]].
- For FPL: The acquisition allows FPL to leverage its multi-asset class capabilities to create value and drive performance via active asset and portfolio management in the hospitality sector [[2]].
Financial Impact on FPL
The proforma financial impact for FPL, based on the reported aggregate Scheme Consideration of S\$515.4m (at S\$0.71/unit) and funded at a 4% interest cost, could result in [[2]]:
- A 1.2% dilution to FY24 NAV [[2]].
- An 8.8-9.5% dilution to FPL’s FY24 core and reported EPS, respectively [[2]].
FPL’s management believes that its multi-class capabilities and longer-term return horizon would enable it to unlock these asset values in the longer run [[2]].
Investment Rating and Recommendation
CGS International maintains an Add rating on FPL with an unchanged TP of S\$1.41, based on a 45% discount to RNAV of S\$2.56, pending completion of the transaction [[2]]. Active capital recycling and improvements in its free float and trading liquidity are potential re-rating catalysts [[2]].
Key Downside Risks
- Slower value unlocking activities due to a weaker macro outlook [[2]].
- High net debt to equity ratio that could drag on its pace of reinvestments [[3]].
Company Overview and Financial Performance
Frasers Property Limited (FPL SP) is currently trading at S\$0.815, with a target price of S\$1.41, offering an upside of 73.5% [[3]].
Key Statistics
- Market Cap: US\$2,453m or S\$3,200m [[3]].
- Average Daily Turnover: US\$0.10m or S\$0.13m [[3]].
- Current Shares O/S: 3,926m [[3]].
- Free Float: 13.1% [[3]].
Price Performance
- 1 Month: Absolute 10.9%, Relative -6.1% [[3]].
- 3 Months: Absolute -4.1%, Relative -6.1% [[3]].
- 12 Months: Absolute 1.9%, Relative -28.8% [[3]].
Major Shareholders
- TCC holds 86.9% [[3]].
Financial Summary
| (S\$m) | Sep-23A | Sep-24A | Sep-25F | Sep-26F | Sep-27F |
|---|---|---|---|---|---|
| Total Net Revenues | 3,977 | 4,234 | 3,959 | 3,291 | 3,438 |
| Operating EBITDA | 1,242 | 1,147 | 1,007 | 929 | 942 |
| Net Profit | 173.1 | 206.3 | 197.2 | 198.5 | 195.8 |
| Core EPS (S\$) | 0.13 | 0.09 | 0.05 | 0.05 | 0.05 |
Key Financial Ratios
| Key Ratios | Sep-23A | Sep-24A | Sep-25F | Sep-26F | Sep-27F |
|---|---|---|---|---|---|
| Core EPS Growth | -34.6% | -43.0% | 0.6% | (1.4%) | – |
| FD Core P/E (x) | 6.05 | 9.25 | 16.22 | 16.12 | 16.34 |
| DPS (S\$) | 0.045 | 0.045 | 0.045 | 0.045 | 0.045 |
| Dividend Yield | 5.52% | 5.52% | 5.52% | 5.52% | 5.52% |
| EV/EBITDA (x) | 17.26 | 18.26 | 20.85 | 22.89 | 22.10 |
| Net Gearing | 75.8% | 83.4% | 80.8% | 79.6% | 73.4% |
| P/BV (x) | 0.30 | 0.32 | 0.31 | 0.31 | 0.29 |
| ROE | 5.22% | 3.54% | 2.02% | 1.99% | 1.89% |
Peer Comparison Table
A comparison of Singapore developers shows FPL’s relative positioning [[2]].
| Company | Bloomberg Ticker | Recom. | Price (lc) | Tgt Px (lc) | Mkt Cap (US\$ m) | Core P/E (x) FY24A | Core P/E (x) FY25F | RNAV | Prem./(Disc.) FY25F to RNAV (%) | P/BV (x) FY24A | P/BV (x) FY25F | Div. Yield (%) FY24A | Div. Yield (%) FY25F |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| APAC Realty Ltd | APAC SP | Add | 0.43 | 0.45 | 117 | 15.9 | 12.9 | n.a. | n.a. | 0.94 | 0.90 | 4.8% | 5.9% |
| Capitaland Investment | CLI SP | Add | 2.53 | 4.30 | 9,718 | 26.6 | 15.4 | 4.78 | -47% | 0.93 | 0.88 | 4.7% | 4.7% |
| City Developments | CIT SP | Add | 4.83 | 8.97 | 3,323 | 61.6 | 18.1 | 16.32 | -70% | 0.48 | 0.45 | 2.1% | 2.5% |
| Frasers Property Limited | FPL SP | Add | 0.82 | 1.41 | 2,464 | 9.2 | 16.2 | 2.57 | -68% | 0.32 | 0.31 | 5.5% | 5.5% |
| Hongkong Land Holdings Ltd | HKL SP | Hold | 5.06 | 4.91 | 11,140 | 27.3 | 16.6 | na | na | 0.37 | 0.36 | 4.5% | 4.7% |
| Propnex Ltd | PROP SP | Add | 1.04 | 1.25 | 593 | 18.8 | 12.3 | n.a. | n.a. | 6.24 | 5.97 | 7.5% | 7.7% |
| UOL Group | UOL SP | Add | 5.75 | 8.20 | 3,741 | 16.9 | 14.4 | 13.66 | -58% | 0.42 | 0.41 | 3.1% | 3.1% |
| Singapore average | 23.0 | 15.9 | -50% | 0.48 | 0.47 | 4.3% | 4.4% |
ESG Analysis
According to LSEG, FPL scored a B- for its overall ESG in 2023, with Environmental (B+), Social (B-) and Governance (C+) ratings [[2]]. Its ESG Controversies stood at A+ [[2]].
Key ESG Highlights
- Arranged S\$3.5bn in green and sustainability-linked loans in FY23, bringing the total to S\$11.4bn [[2]].
- 51% of owned or asset-managed operating properties and 90% of new development projects were green-certified/pursuing certification as of September 2023 [[2]].
- A 29% decrease in total Scope 1 and Scope 2 location-based carbon emissions vs. FY19 [[2]].
- Generated more than 18 GWh of renewable energy on-site, a 16% increase from FY22 [[2]].
- Almost all employees are trained on sustainability [[2]].
ESG Trends
FPL ranks well for resource use (A), emissions score (A+), workforce (A-) and CSR strategy (A+) [[2]].
Detailed Financial Analysis
Profit & Loss Statement
| (S\$m) | Sep-23A | Sep-24A | Sep-25F | Sep-26F | Sep-27F |
|---|---|---|---|---|---|
| Total Net Revenues | 3,977 | 4,234 | 3,959 | 3,291 | 3,438 |
| Gross Profit | 1,574 | 1,513 | 1,342 | 1,192 | 1,220 |
| Operating EBITDA | 1,242 | 1,147 | 1,007 | 929 | 942 |
| Operating EBIT | 1,162 | 1,068 | 924 | 845 | 857 |
| Net Profit | 173 | 206 | 197 | 199 | 196 |
Cash Flow Statement
| (S\$m) | Sep-23A | Sep-24A | Sep-25F | Sep-26F | Sep-27F |
|---|---|---|---|---|---|
| EBITDA | 1,242 | 1,147 | 1,007 | 929 | 942 |
| Cashflow From Operations | 369 | 78 | (34) | (291) | 424 |
| Capex | (1,854) | (1,384) | (230) | (230) | (230) |
| Cash Flow From Investing | (1,468) | (339) | (78) | (19) | (28) |
| Cash Flow From Financing | (689) | (847) | (778) | (743) | (743) |
Balance Sheet
| (S\$m) | Sep-23A | Sep-24A | Sep-25F | Sep-26F | Sep-27F |
|---|---|---|---|---|---|
| Total Cash And Equivalents | 2,658 | 2,717 | 2,837 | 2,743 | 3,354 |
| Total Current Assets | 7,672 | 7,215 | 7,227 | 6,942 | 7,526 |
| Total Non-current Assets | 32,110 | 32,422 | 32,652 | 32,882 | 33,112 |
| Total Current Liabilities | 6,635 | 6,117 | 5,936 | 5,494 | 5,594 |
| Total Non-current Liabilities | 14,946 | 16,051 | 16,051 | 16,051 | 16,051 |
| Total Liabilities | 21,581 | 22,167 | 21,987 | 21,545 | 21,645 |
| Total Equity | 18,200 | 17,470 | 17,892 | 18,279 | 18,993 |
Key Ratios and Drivers
| Key Ratios | Sep-23A | Sep-24A | Sep-25F | Sep-26F | Sep-27F |
|---|---|---|---|---|---|
| Revenue Growth | 1.8% | 6.8% | (6.1%) | (16.9%) | 4.5% |
| Operating EBITDA Growth | 1.0% | (7.6%) | (12.2%) | (7.8%) | 1.4% |
| Net Cash Per Share (S\$) | (3.52) | (3.71) | (3.68) | (3.70) | (3.55) |
| BVPS (S\$) | 2.75 | 2.53 | 2.59 | 2.65 | 2.79 |
| ROIC (%) | 16.3% | 16.9% | 16.4% | 14.7% | 14.2% |
| ROCE (%) | 3.60% | 3.37% | 2.92% | 2.63% | 2.63% |
