AXREIT (5106) : Axis REIT - A decent quarter
Target RM3.85 (Stock Rating: ADD)
Axis REIT's (Axis) 3QFY14 core net profit of RM19.2m brings its 9MFY14 core net profit to RM61.9m, which makes up 62% and 64% of our and consensus full-year estimates, respectively. We consider this as in line as we anticipate stronger earnings in the 4Q as Axis completes its acquisition of a few properties, which will contribute to earnings. We finetune our earnings forecasts for housekeeping purposes while our DDM-based target price is raised slightly to RM3.86 (from RM3.82 previously) after we roll forward our valuation base year. We maintain our Add call on the stock. We think more newsflow on new acquisitions will catalyse the stock.
3Q DPU of 5 sen
Axis declared a third interim dividend of 5 sen per share, which brings its YTD DPU to 14.6 sen per share, in line with our full-year estimate of 22 sen as we anticipate stronger earnings in the final quarter.
3Q14 earnings review
For the 3Q14, Axis's revenues declined by 6.2%, mainly due to the disposal of Axis Plaza earlier in the year. Net property income (NPI) declined by 7.4% as property expenses were 0.5% higher. Given stable financing costs coupled with higher non-property expenses of 10% yoy, Axis's net profit fell 12.7% yoy to RM19.2m. This is after stripping out its revaluation gains of RM20.9m (RM14.6m in 2013) during the quarter. 9MFY14 core net profit slid 4.5% yoy as Axis Plaza was disposed of at the end of the 1QFY14.
More acquisitions
Axis recently announced that it has entered into a sale and purchase agreement (SPA) for the proposed acquisition and leaseback of an industrial property located within Kawasan Perindustrian SiLC, Nusajaya, i.e. within the Iskandar area. The property will be yield-accretive for Axis as its existing yield is around 7.2% p.a. Axis will fund the acquisition through bank borrowings, which will increase its gearing level to 38.6%. We think investors should continue to accumulate Axis as we believe that it is on an acquisition drive to further expand its asset base. Aside from the Iskandar property, it is also currently in the midst of acquiring properties valued at a total RM280.5m.
Source: CIMB Daybreak - 23 October 2014
Target RM3.85 (Stock Rating: ADD)
Axis REIT's (Axis) 3QFY14 core net profit of RM19.2m brings its 9MFY14 core net profit to RM61.9m, which makes up 62% and 64% of our and consensus full-year estimates, respectively. We consider this as in line as we anticipate stronger earnings in the 4Q as Axis completes its acquisition of a few properties, which will contribute to earnings. We finetune our earnings forecasts for housekeeping purposes while our DDM-based target price is raised slightly to RM3.86 (from RM3.82 previously) after we roll forward our valuation base year. We maintain our Add call on the stock. We think more newsflow on new acquisitions will catalyse the stock.
3Q DPU of 5 sen
Axis declared a third interim dividend of 5 sen per share, which brings its YTD DPU to 14.6 sen per share, in line with our full-year estimate of 22 sen as we anticipate stronger earnings in the final quarter.
3Q14 earnings review
For the 3Q14, Axis's revenues declined by 6.2%, mainly due to the disposal of Axis Plaza earlier in the year. Net property income (NPI) declined by 7.4% as property expenses were 0.5% higher. Given stable financing costs coupled with higher non-property expenses of 10% yoy, Axis's net profit fell 12.7% yoy to RM19.2m. This is after stripping out its revaluation gains of RM20.9m (RM14.6m in 2013) during the quarter. 9MFY14 core net profit slid 4.5% yoy as Axis Plaza was disposed of at the end of the 1QFY14.
More acquisitions
Axis recently announced that it has entered into a sale and purchase agreement (SPA) for the proposed acquisition and leaseback of an industrial property located within Kawasan Perindustrian SiLC, Nusajaya, i.e. within the Iskandar area. The property will be yield-accretive for Axis as its existing yield is around 7.2% p.a. Axis will fund the acquisition through bank borrowings, which will increase its gearing level to 38.6%. We think investors should continue to accumulate Axis as we believe that it is on an acquisition drive to further expand its asset base. Aside from the Iskandar property, it is also currently in the midst of acquiring properties valued at a total RM280.5m.
Source: CIMB Daybreak - 23 October 2014
