Investors dump Frasers Centrepoint Trust shares over Australia expansion jitters

The sell-down is overdone, analysts say.

Frasers Centrepoint Trust has suffered a painful sell-off since October, likely sparked by market jitters on the group’s aggressive Australia expansion plans. However, analysts at OCBC believe that the sell-off is overdone and FCT is well poised to capitalise on continent’s booming retail market.

“Concerns over FCT’s possible entry into a new market may be one of the factors contributing to its recent share price correction. Given Singapore’s relatively small market size and difficulty in finding attractive acquisition targets, we believe FCT may look overseas for inorganic growth opportunities, with Australia a likely destination,” OCBC said in a report.

During the group’s latest analyst briefing, management highlighted that there is a possibility for FCT to acquire assets in Australia.

In particular, OCBC noted that Frasers Property Australia plans to grow its retail portfolio from A$300m to A$1b in the next three to five years, and these assets may potentially be divested to FCT.

“However, this would likely only be a medium-to-long term strategy, in our view, as FPA needs time to build up its retail scale. Hence we believe the market may have over-reacted to this,” the report noted.