SGX-listed Frasers Property Ltd (SG:TQ5) is undertaking a strategic review of its business, which could lead to a partial or complete sale of the company. Frasers’ majority shareholders are strategizing to reduce the excessive debt load the company accumulated while making acquisitions in the past. Following the news, TQ5 shares gained 3.8% today, hitting a new 52-week high of S$0.95.
Singapore-based Frasers Property Ltd is a multinational real estate company with operations across Singapore, Australia, Europe, China, and Southeast Asia. TQ5 shares have gained 1.1% in the past year.
Frasers’ Strategic Review
As per a Wall Street Journal report, Frasers could sell some of its assets or the entire business to increase liquidity and pay off debt. The talks are in the initial stages and could even result in no outcome.
Frasers is majority-owned (roughly 87%) by Thailand’s richest person, Charoen Sirivadhanabhakdi. His investments in Frasers are routed through his SGX-listed company Thai Beverage (SG:Y92), private firm TCC Assets, and other related entities.
Frasers has been facing operational challenges as the global real estate sector remains under pressure. For Fiscal 2023 ending September 30, 2023, Frasers posted an attributable profit (available to shareholders) of S$173.1 million, down a staggering 81.3% year-over-year. Also, revenue grew by a modest 1.8% to S$3.95 billion.
Moreover, Frasers ended Fiscal 2023 with a net debt to total equity ratio of 75.8%, weaker than Fiscal 2022’s figure of 64.8%. Most of the company’s debt is fixed, with an average maturity of 2.6 years as of September 30, 2023. This implies that the company will soon have to pay off the debt or refinance at higher interest rates. It’s no wonder, then, that the shareholders are undertaking a timely strategic review and mulling over feasible options.
What is the Price Target for Frasers Property?
On TipRanks, TQ5 stock has a Moderate Buy consensus rating based on two Buy recommendations received during the past three months. These ratings could change following the strategic review news. The Frasers Property Ltd share price target of S$1.13 implies 23.7% upside potential from current levels.
