PAVREIT (5212) - Pavilion REIT - A steady ship
Target RM1.50 (Stock Rating: HOLD)
Pavilion REIT's 1Q15 core net profit of RM60.5m was in line with our and consensus estimates, accounting for 26% of our full-year forecast and 28% of consensus. We consider this in line as we project softer quarters ahead for Pavilion REIT due to deteriorating consumer sentiment, underpinned by the GST and weaker ringgit. Core net profit grew by 6.8% yoy on the back of 3.9% revenue growth for the quarter. We make no changes to our earnings forecasts and DDM-based target price of RM1.50. We maintain our Hold call on the stock. For exposure to M-REITs, we recommend Axis REIT.
1Q15 DPU of 2.01 sen
Pavilion declared income distribution of 2.01 sen per share for 1Q15. This is in line with our estimate as it accounts for 25% of our full-year forecast. The DPU represents a 99% payout of Pavilion REIT's 1Q earnings.
1Q15 earnings review
For the 1Q15, Pavilion's revenues grew by 3.9% yoy to RM105.1m, driven by the retail segment's revenue growth of 4.3% yoy, while its office segment revenues declined by 9% yoy. The revenue growth from the retail segment was mainly driven by new contribution from rentals from its asset enhancement initiatives (AEI), including Pavilion's Beauty Precinct, the 'Couture Pavilion' extension and the Dining Loft. Net property income (NPI) during the 1Q15 grew by 6% yoy to RM72.9m as property operating expenses were flat yoy, mainly due to higher costs in the 1Q14 resulting from overprovisions of property assessment rate charges before the final assessment charge was confirmed by DBKL. PBT grew by 6.8% yoy to RM60.5m and, after accounting for non-cash charges of RM1.9m, distributable income grew by 6.7% yoy to RM62.3m.
Capex of RM34m in 2015
We expect Pavilion to incur capex of around RM34m in 2015, which will be mainly used to increase its mall's power efficiency, including installing new thermostats to better allocate cold air. This is expected to lower its overall utilities costs, which amount to RM36m-37m p.a..
Source: CIMB Daybreak - 24 April 2015
Target RM1.50 (Stock Rating: HOLD)
Pavilion REIT's 1Q15 core net profit of RM60.5m was in line with our and consensus estimates, accounting for 26% of our full-year forecast and 28% of consensus. We consider this in line as we project softer quarters ahead for Pavilion REIT due to deteriorating consumer sentiment, underpinned by the GST and weaker ringgit. Core net profit grew by 6.8% yoy on the back of 3.9% revenue growth for the quarter. We make no changes to our earnings forecasts and DDM-based target price of RM1.50. We maintain our Hold call on the stock. For exposure to M-REITs, we recommend Axis REIT.
1Q15 DPU of 2.01 sen
Pavilion declared income distribution of 2.01 sen per share for 1Q15. This is in line with our estimate as it accounts for 25% of our full-year forecast. The DPU represents a 99% payout of Pavilion REIT's 1Q earnings.
1Q15 earnings review
For the 1Q15, Pavilion's revenues grew by 3.9% yoy to RM105.1m, driven by the retail segment's revenue growth of 4.3% yoy, while its office segment revenues declined by 9% yoy. The revenue growth from the retail segment was mainly driven by new contribution from rentals from its asset enhancement initiatives (AEI), including Pavilion's Beauty Precinct, the 'Couture Pavilion' extension and the Dining Loft. Net property income (NPI) during the 1Q15 grew by 6% yoy to RM72.9m as property operating expenses were flat yoy, mainly due to higher costs in the 1Q14 resulting from overprovisions of property assessment rate charges before the final assessment charge was confirmed by DBKL. PBT grew by 6.8% yoy to RM60.5m and, after accounting for non-cash charges of RM1.9m, distributable income grew by 6.7% yoy to RM62.3m.
Capex of RM34m in 2015
We expect Pavilion to incur capex of around RM34m in 2015, which will be mainly used to increase its mall's power efficiency, including installing new thermostats to better allocate cold air. This is expected to lower its overall utilities costs, which amount to RM36m-37m p.a..
Source: CIMB Daybreak - 24 April 2015
