KLCC (5235SS) - KLCC Property Holdings - Earnings outlook stable
Target RM6.90 (Stock Rating: HOLD)
There were no surprises during KLCCP's FY14 results briefing today. We gather that its FY15 earnings outlook will likely be stable, underpinned by its office segments, and that its retail segment will see organic growth through the reversion of 30% of its NLA. While we like KLCCP's stable earnings outlook amid of the current weak overall market conditions, its current yields of 5.2-5.6% implies that there is not much upside in terms of share price or yield, especially given the dry acquisition outlook. Thus, we maintain our Hold call on the stock, with an unchanged DDM-based target price of RM6.90.
What Happened
We attended an analysts briefing held by KLCCP in conjunction with the release of its 4Q14 results which was released on the 26th Jan. The briefing was held at KLCC Convention Centre and was well attended by more than 30 analysts and fund managers. The briefing was chaired by CFO En Annuar Marzuki while CEO Datuk Hashim Wahir was there to field the questions. Key takeaways from the briefing are: 1) FY14 earnings were driven by retail revenue growth underpinned by new tenants and higher rental rates; 2) FY15 earnings outlook to remain stable with growth coming from rental reversions – 30% of Suria's NLA is up for reversions while Menara 3 will see higher rentals this year (under its triple net lease agreement, rental will be increased every three years); and 3) acquisitions are not likely to materialise in FY15 though over the longer-term, there will likely be acquisitions once the company completes its various developments such as the Citypoint Podium.
What We Think
We think KLCCP's stable earnings outlook could be attractive in light of the current jittery market conditions. However, its current dividends yields of 5.2-5.6% does not give much room for share price upside as the 10-year MGS rates are hovering around 4.2%. This translates to a yield spread of only 100bp which we think will not go any lower. However, we believe its stable earnings would likely keep its valuations at current levels, which implies that downside risk is also minimal.
What You Should Do
Given the abovementioned reasons, we keep our Hold call on KLCCP, with an unchanged DDM-based target price of RM6.90. For exposure to M-REITs, we prefer Axis REIT.
Source: CIMB Daybreak - 29 January 2015
Target RM6.90 (Stock Rating: HOLD)
There were no surprises during KLCCP's FY14 results briefing today. We gather that its FY15 earnings outlook will likely be stable, underpinned by its office segments, and that its retail segment will see organic growth through the reversion of 30% of its NLA. While we like KLCCP's stable earnings outlook amid of the current weak overall market conditions, its current yields of 5.2-5.6% implies that there is not much upside in terms of share price or yield, especially given the dry acquisition outlook. Thus, we maintain our Hold call on the stock, with an unchanged DDM-based target price of RM6.90.
What Happened
We attended an analysts briefing held by KLCCP in conjunction with the release of its 4Q14 results which was released on the 26th Jan. The briefing was held at KLCC Convention Centre and was well attended by more than 30 analysts and fund managers. The briefing was chaired by CFO En Annuar Marzuki while CEO Datuk Hashim Wahir was there to field the questions. Key takeaways from the briefing are: 1) FY14 earnings were driven by retail revenue growth underpinned by new tenants and higher rental rates; 2) FY15 earnings outlook to remain stable with growth coming from rental reversions – 30% of Suria's NLA is up for reversions while Menara 3 will see higher rentals this year (under its triple net lease agreement, rental will be increased every three years); and 3) acquisitions are not likely to materialise in FY15 though over the longer-term, there will likely be acquisitions once the company completes its various developments such as the Citypoint Podium.
What We Think
We think KLCCP's stable earnings outlook could be attractive in light of the current jittery market conditions. However, its current dividends yields of 5.2-5.6% does not give much room for share price upside as the 10-year MGS rates are hovering around 4.2%. This translates to a yield spread of only 100bp which we think will not go any lower. However, we believe its stable earnings would likely keep its valuations at current levels, which implies that downside risk is also minimal.
What You Should Do
Given the abovementioned reasons, we keep our Hold call on KLCCP, with an unchanged DDM-based target price of RM6.90. For exposure to M-REITs, we prefer Axis REIT.
Source: CIMB Daybreak - 29 January 2015
