IGB REIT - Continues to deliver
Target RM1.25 (Stock Rating: HOLD)
IGB REIT's 3Q14 core net profit of RM60.1m brought its 9M14 core net profit to RM176.4m, in line with expectations as it accounted for 76% and 78% of our and consensus earnings forecasts, respectively. Net property income (NPI) and distributable income grew by 8.7% and 8.1% yoy, respectively, underpinned by higher rentals and lower property expenses. We make no changes to our FY14-16 earnings forecasts. Our DDM-based target price is also maintained at RM1.25. Given the lack of asset injections in the foreseeable future, we see few catalysts for IGB REIT's share price. We thus maintain our Hold call on the stock. We prefer Axis REIT instead.
3Q DPU of 2.01 sen
IGB REIT declared a DPU of 2.01 sen for 3Q14, which brings its YTD total DPU to 5.9 sen. This is in line with our estimates as it accounts for 76% of our full-year DPU forecast of 7.6 sen.
3Q14 results review
For the 3Q14, IGB REIT's revenues grew by 4.3% yoy, mainly driven by higher rental income during the period as 53% of The Gardens Mall's net lettable area (NLA) underwent rental reversions in 2013. IGB REIT's net property income (NPI) grew by 8.7% yoy to RM73.7m as IGB REIT's overall property expenses were lower yoy by 3.5%. PBT during the quarter grew significantly, although this was due to the revaluation gains of RM85m as IGB REIT undertook a revaluation exercise for its properties while, in FY13, the revaluation was done in the 4Q13. Stripping out the revaluation gains, core net profit grew by 11.7% yoy as interest expenses remained stable although investment income inched higher. After accounting for non-cash adjustments of RM75.8m, IGB REIT's distributable income grew by 8.1% to RM69.3m, in line with its NPI growth.
No new asset injections
Although IGB REIT's earnings grew, we believe that there are no exciting catalysts that could boost its earnings further in the medium term given the lack of asset injections in the foreseeable term. IGB's development in Johor, Southkey Mall, will only be ready by 2016-2017 while other asset injections look unlikely at this point in time.
Source: CIMB Daybreak - 30 October 2014, Full PDF Report
Target RM1.25 (Stock Rating: HOLD)
IGB REIT's 3Q14 core net profit of RM60.1m brought its 9M14 core net profit to RM176.4m, in line with expectations as it accounted for 76% and 78% of our and consensus earnings forecasts, respectively. Net property income (NPI) and distributable income grew by 8.7% and 8.1% yoy, respectively, underpinned by higher rentals and lower property expenses. We make no changes to our FY14-16 earnings forecasts. Our DDM-based target price is also maintained at RM1.25. Given the lack of asset injections in the foreseeable future, we see few catalysts for IGB REIT's share price. We thus maintain our Hold call on the stock. We prefer Axis REIT instead.
3Q DPU of 2.01 sen
IGB REIT declared a DPU of 2.01 sen for 3Q14, which brings its YTD total DPU to 5.9 sen. This is in line with our estimates as it accounts for 76% of our full-year DPU forecast of 7.6 sen.
3Q14 results review
For the 3Q14, IGB REIT's revenues grew by 4.3% yoy, mainly driven by higher rental income during the period as 53% of The Gardens Mall's net lettable area (NLA) underwent rental reversions in 2013. IGB REIT's net property income (NPI) grew by 8.7% yoy to RM73.7m as IGB REIT's overall property expenses were lower yoy by 3.5%. PBT during the quarter grew significantly, although this was due to the revaluation gains of RM85m as IGB REIT undertook a revaluation exercise for its properties while, in FY13, the revaluation was done in the 4Q13. Stripping out the revaluation gains, core net profit grew by 11.7% yoy as interest expenses remained stable although investment income inched higher. After accounting for non-cash adjustments of RM75.8m, IGB REIT's distributable income grew by 8.1% to RM69.3m, in line with its NPI growth.
No new asset injections
Although IGB REIT's earnings grew, we believe that there are no exciting catalysts that could boost its earnings further in the medium term given the lack of asset injections in the foreseeable term. IGB's development in Johor, Southkey Mall, will only be ready by 2016-2017 while other asset injections look unlikely at this point in time.
Source: CIMB Daybreak - 30 October 2014, Full PDF Report
