SUNREIT (5176) - Sunway REIT - Revenues driven by retail
Target RM1.53 (Stock Rating: HOLD)
Sunway REIT's 2Q15 core net profit of RM63.3m brought its 1HFY15 core net profit to RM126.7m. Although this accounts for 47% of our full-year forecast (and 45% of consensus), we consider the results in-line as we expect stronger numbers in the 4Q15 when Sunway Putra Mall is reopened. Earnings in the 2Q15 grew by 2% yoy on the back of a 3.3% revenue growth, which was mainly driven by Sunway REIT's retail assets, namely the Sunway Pyramid and Sunway Carnival malls. We make no changes to our FY15-17 earnings forecasts and DDM-based target price of RM1.53. We maintain our Hold call on the stock. For exposure to M-REITs, we prefer Axis REIT instead.
2Q15 DPU of 2.27 sen
Sunway REIT declared a second interim DPU of 2.27 sen, which brings 1H15 DPU to 4.5 sen, in line with our estimates as it accounts for 50% of our full-year DPU forecast of 8.9 sen. Moving forward, we expect DPU growth to be driven by the reopening of Sunway Putra Mall.
2Q15 results review
Sunway REIT's 2Q15 revenue grew by 3.3% yoy, driven by revenue of the Sunway Pyramid and Sunway Carnival malls which rose 7.9% and 15.7% yoy, respectively. The solid growth achieved by both malls was mainly due to the strong rental reversions at both malls, coupled with higher occupancy rates at Sunway Carnival mall. Approximately 1m sq ft was renewed at double-digit rental reversions. Net property income (NPI) grew by 2.7% yoy as property operating expenses was higher during the quarter due to higher utilities costs given the electricity tariff hike which took effect earlier in calendar year 2014. Core net profit for the quarter grew by 2% yoy to RM63.3m while distributable profit stood at RM67 m, a 2.8% yoy growth over its 2Q14’s distributable profit of RM65.2m.
Conference call highlights
Sunway REIT held a conference call in conjunction with the release of its results. Key highlights from the conference call: 1) the office segment outlook dampened due to the loss of anchor tenants, and 2) the Sunway Georgetown Hotel acquisition has been completed, while that of Wisma Sunway will be concluded later this calendar year.
Source: CIMB Daybreak - 29 January 2015
Target RM1.53 (Stock Rating: HOLD)
Sunway REIT's 2Q15 core net profit of RM63.3m brought its 1HFY15 core net profit to RM126.7m. Although this accounts for 47% of our full-year forecast (and 45% of consensus), we consider the results in-line as we expect stronger numbers in the 4Q15 when Sunway Putra Mall is reopened. Earnings in the 2Q15 grew by 2% yoy on the back of a 3.3% revenue growth, which was mainly driven by Sunway REIT's retail assets, namely the Sunway Pyramid and Sunway Carnival malls. We make no changes to our FY15-17 earnings forecasts and DDM-based target price of RM1.53. We maintain our Hold call on the stock. For exposure to M-REITs, we prefer Axis REIT instead.
2Q15 DPU of 2.27 sen
Sunway REIT declared a second interim DPU of 2.27 sen, which brings 1H15 DPU to 4.5 sen, in line with our estimates as it accounts for 50% of our full-year DPU forecast of 8.9 sen. Moving forward, we expect DPU growth to be driven by the reopening of Sunway Putra Mall.
2Q15 results review
Sunway REIT's 2Q15 revenue grew by 3.3% yoy, driven by revenue of the Sunway Pyramid and Sunway Carnival malls which rose 7.9% and 15.7% yoy, respectively. The solid growth achieved by both malls was mainly due to the strong rental reversions at both malls, coupled with higher occupancy rates at Sunway Carnival mall. Approximately 1m sq ft was renewed at double-digit rental reversions. Net property income (NPI) grew by 2.7% yoy as property operating expenses was higher during the quarter due to higher utilities costs given the electricity tariff hike which took effect earlier in calendar year 2014. Core net profit for the quarter grew by 2% yoy to RM63.3m while distributable profit stood at RM67 m, a 2.8% yoy growth over its 2Q14’s distributable profit of RM65.2m.
Conference call highlights
Sunway REIT held a conference call in conjunction with the release of its results. Key highlights from the conference call: 1) the office segment outlook dampened due to the loss of anchor tenants, and 2) the Sunway Georgetown Hotel acquisition has been completed, while that of Wisma Sunway will be concluded later this calendar year.
Source: CIMB Daybreak - 29 January 2015
