CGSI, OCBC cut FCT target price despite record FY2026 payout

FCT units reached their highest level since August on October 23, while brokerages maintained a positive outlook despite near-term challenges. CGS International and OCBC Group Research both lowered their target prices for Frasers Centrepoint Trust (FCT). FCT distributed S$0.1235 per unit for its financial year ended September 30, marking a 2% increase year on year.

The performance matched market expectations, driven by strong organic rental growth and a significant contribution from Northpoint City South Wing. FCT's units reached an intra-day high of S$2.20 on Friday, their highest since late August. Five brokerages, including CGSI, maintained their "buy" recommendations, but their valuation assessments varied due to considerations of upcoming asset enhancement initiatives, potential competition from cross-border retail, and higher interest rate expectations.

CGSI raised its cost-of-equity assumption to 6.9% from 6.3%, while OCBC lowered its fair value estimate to S$2.24 from S$2.43, citing a higher risk-free rate assumption of 2.65%. Despite the valuation adjustments, both brokerages noted FCT's defensive suburban mall portfolio as well-positioned amid an uncertain macroeconomic environment, supported by stable shopper traffic and recurring spending on essential goods and services.