Today, I exercised my shareholder’s rights for the first time by attending the Frasers
Centrepoint Property Ltd Annual General Meeting (AGM) held at InterContinental Singapore, mostly for my Continuing Investor Education requirements. (Professionals have CPE requirements, Investors should have CIE requirements 😛 )
Here are 5 quick highlights and questions raised by shareholders:
1) New Year, New name.
To be honest, this was the only company resolution on the docket that was remotely interesting. Frasers Centrepoint Ltd was being renamed Frasers Property Ltd. A shareholder raised the question on why there was a need to rebrand and the cost of the rebrand.
The current CEO Panote highlighted that the Centrepoint brand is inconsistent with their overseas subsidiaries which were already trading under the Frasers Property brand. As such, to better align with all the sub property brands and reflect the company’s overseas expansion ambitions, it was decided to rebrand to Frasers Property Ltd. The CEO further elaborated that the company had set aside a $6.8M budget for the rebranding exercise.
Former CEO and major shareholder Lim Ee Seng also came to the rescue of the board by giving a deep history of the naming of the company from the time where it was named Centrepoint Properties Ltd to when it was named Frasers Centrepoint Ltd. He also elaborated on his decision to brand the overseas subsidiaries as Frasers Property instead of Centrepoint. Interesting stuff.
2) High Debt to Equity
One shareholder expressed concern over the company’s high debt to equity of 89% and questioned the Board on whether upcoming interest rate hikes will severely impact the company as a result.
The CFO explained that the company usually focuses on net debt to equity (after removing current assets) which works out to be 71%. He further expressed that the Board’s prevailing guideline to management was to maintain a 80% net debt to equity level.
3) Stagnating attributable profit, Declining ROE and EPS
One shareholder expressed concern on the company’s stagnating profit, declining Return on Equity (ROE) and Earnings per Share (EPS) since 2014 when the company listed.
Panote expressed that the company had made a strategic decision to move from a property development model to a Investment Property management model. This improves earning quality as you get recurring cashflow from investment properties. The downside is that you do not get the potentially higher margins from property development.
He further mentioned that they are still in the process of transitioning to this model as properties recently acquired are not accretive to earnings yet.
4) Expansion in Europe rationale.
One shareholder wanted the Board to explain the rationale for the company’s recent push into Europe with acquisitions of warehouses and industrial parks in the UK and Germany.
Panote expressed the need to diversify away from Singapore and Australia which are considered mature markets for FCL (FPL now?). He also noted that he expects the UK property market to be stable in spite of Brexit due to continued commitments from financial institutions to the country. Lastly, he mentioned that the properties acquired are in geographies that FPL already has a presence and will stand to benefit from the network effect from existing relationships.
5) Buffet food at AGM is still a thing
I was pleasantly surprised that there was a buffet spread on hand after the AGM (in spite of the negative press surrounding this practice in recent years), which explained the ever thinning crowd as the AGM slowly drew to a close. Apparently they left to queue at the buffet line!
Typical Singaporeans 😀
Overall, a pretty nice and easy first AGM to attend, the whole process concluded in less than 2 hours. Although I’m a tiny minority shareholder who will never affect the outcome of the voting, I found some of the questions thought provoking and made me re-evaluate my own investment in the company. If you ever find time to attend an AGM for any of your stock investments, exercise that right to attend. You never know when you’ll learn something. Worse come to worse, its at least a free cup of coffee right? 🙂