AXREIT (5106) - Axis REIT - Slightly weak
Target RM3.79 (Stock Rating: ADD)
Axis REIT's 1Q15 core net profit of RM22.8m missed expectations, accounting for only 22% of our and 21% of consensus FY15 estimates. The main variance to our number was the higher-than-expected finance costs, due to the debt it took on earlier this year to finance its various acquisitions. Earnings for the quarter were also affected by some one-off maintenance costs. We cut our FY15-17 earnings and DPU estimates by 5-12% to account for the weaker 1Q15 earnings. Our DDM-based target price is reduced to RM3.79, based on an unchanged cost of equity of 8.1%. Despite the earnings setback, we maintain our Add call on the stock as we believe Axis REIT's acquisition drive would see it gain more interest from investors.
1Q15 DPU of 4.1 sen
Axis REIT announced a 1Q15 DPU of 4.1 sen which was below estimates, as it accounted for only 20% of our full-year DPU forecast of 20 sen. As such, we have cut our DPU forecast for FY15, in line with our lowered earnings projection.
1Q15 earnings review
Revenues rose 14.1% yoy mainly due to the contribution from the three properties it acquired in 4Q14. Property operating expenses increased by 3.1% mainly due to the higher costs at the new properties. As a result, net property income rose 16.3% yoy. As highlighted, finance costs increased by 29.1% yoy due to the financing facilities used to fund the acquisitions. Net income grew by 1% yoy while DPU declined by 22.6% yoy as 1Q14 DPU included a portion of the realised gain from the disposal of Axis Plaza.
More acquisitions expected
Axis went gone on an acquisition drive in 2014, and the latest acquisition was completed in late 1Q15. We understand its appetite is still strong, and it is targeting to acquire seven more warehouses located in various states in Peninsular Malaysia with a total value of RM270m. As such, we expect more acquisitions to continue to drive Axis REIT's share price performance. Maintain Add.
Source: CIMB Daybreak - 21 April 2015
Target RM3.79 (Stock Rating: ADD)
Axis REIT's 1Q15 core net profit of RM22.8m missed expectations, accounting for only 22% of our and 21% of consensus FY15 estimates. The main variance to our number was the higher-than-expected finance costs, due to the debt it took on earlier this year to finance its various acquisitions. Earnings for the quarter were also affected by some one-off maintenance costs. We cut our FY15-17 earnings and DPU estimates by 5-12% to account for the weaker 1Q15 earnings. Our DDM-based target price is reduced to RM3.79, based on an unchanged cost of equity of 8.1%. Despite the earnings setback, we maintain our Add call on the stock as we believe Axis REIT's acquisition drive would see it gain more interest from investors.
1Q15 DPU of 4.1 sen
Axis REIT announced a 1Q15 DPU of 4.1 sen which was below estimates, as it accounted for only 20% of our full-year DPU forecast of 20 sen. As such, we have cut our DPU forecast for FY15, in line with our lowered earnings projection.
1Q15 earnings review
Revenues rose 14.1% yoy mainly due to the contribution from the three properties it acquired in 4Q14. Property operating expenses increased by 3.1% mainly due to the higher costs at the new properties. As a result, net property income rose 16.3% yoy. As highlighted, finance costs increased by 29.1% yoy due to the financing facilities used to fund the acquisitions. Net income grew by 1% yoy while DPU declined by 22.6% yoy as 1Q14 DPU included a portion of the realised gain from the disposal of Axis Plaza.
More acquisitions expected
Axis went gone on an acquisition drive in 2014, and the latest acquisition was completed in late 1Q15. We understand its appetite is still strong, and it is targeting to acquire seven more warehouses located in various states in Peninsular Malaysia with a total value of RM270m. As such, we expect more acquisitions to continue to drive Axis REIT's share price performance. Maintain Add.
Source: CIMB Daybreak - 21 April 2015
