{"id":322893,"date":"2023-04-28T03:05:15","date_gmt":"2023-04-27T19:05:15","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=322893"},"modified":"2023-04-28T03:05:17","modified_gmt":"2023-04-27T19:05:17","slug":"stock-in-focus-filinvest-reit-corp-filrt-28-apr-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-filinvest-reit-corp-filrt-28-apr-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Filinvest REIT Corp. (FILRT) – 28 Apr 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>FILRT<\/td><\/tr>
Company Name<\/strong><\/td>Filinvest REIT Corp.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>28 Apr 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 5.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We set a BUY rating on FILRT with a target price of Php5.50, which offers a price upside of 4.8% and a 12-month dividend yield of 7.1%. At current price, we believe that yields are now attractive and risk related to the rising work-from-home (WFH) trends (and its impact on office occupancy) are largely priced in.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Reasonable yield even with rising office vacancy<\/strong><\/p>\n\n\n\n

We project 2023\/2024 dividend per share (DPS) to grow 3%\/0% to Php0.37\/Php0.38 driven by the income contribution of the resort lot in Boracay. Our forecast assumes (i) office occupancy rate (ex-Boracay) of 88% (vs. FY22 occupancy rate of 89%) and (ii) average rental rate decline of 5%\/1%, as we incorporate potential office space downsizing and\/or non-renewal of lease contracts in the medium term due to muted demand for office spaces as more companies adopt a hybrid\/full WFH setup. These would result in rent decline over the medium term. <\/p>\n\n\n\n

~3% dividends per share accretion from Boracay land infusion<\/strong><\/p>\n\n\n\n

Last Nov. 2022, FILRT acquired 2.9 hectares (ha) of land in Boracay, Aklan for Php1.1bn cash. The property has an aggregate area of 29,086sqms, which would add 10% to FILRT\u2019s GLA. The land was leased by Boracay Seascapes, Inc. (BSI) under a 40-year minimum contract. FILRT would receive a fixed guaranteed annual rent of Php73.2mn, or a variable lease rate of 4-6% of BSI\u2019s gross room revenue, whichever is higher. Assuming that FILRT only receives the minimum annual rent, then we estimate that the deal would be ~3% dividend per share (DPS) accretive over the long- term.<\/p>\n\n\n\n

Focusing on tenant expansion<\/strong><\/p>\n\n\n\n

FILRT intends to expand its tenant base to fill up vacant office spaces. The company secured 5,087sqms worth of new leases and renewed 22,891sqms, or 96% of expiring leases in FY22. FILRT obtained letters of intent signed by traditional and multinational BPO companies to lease ~9,000sqms of office space in FY23.<\/p>\n\n\n\n

Zero POGO exposure<\/strong><\/p>\n\n\n\n

FILRT has zero POGO exposure at this point; hence there would be no downside risk from further POGO exit on FILRT\u2019s dividends. As of FY22, BPOs occupy 80% of GLA, while traditional, retail, and resort businesses occupy 20% of its GLA.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>