Sunway REIT’s 9MFY12 results came in within our and
consensus expectations, with both revenue and net profit accounting for about
75% of the respective FY12 forecasts. For 9MFY12, net property income (NPI)
rose by 24.7% y-o-y due to the acquisition of Sunway Putra, coupled with the
strong performance of the initial 8 assets, especially Sunway Pyramid Mall. We
maintain our forecast and Neutral recommendation on Sunway REIT at an unchanged
FV of RM1.25, which is based on target yield of 5.7% on CY12 DPU.
Healthier y-o-y.
For 9MFY12, Sunway REIT continued to register healthy growth in NPI with increased by 24.7% y-o-y. This could be
attributed to the acquisition of Sunway Putra Place (SPP) back in April last
year, coupled with the healthy NPI growth chalked up by its initial 8 assets,
especially Sunway Pyramid. However, net earnings for 9MFY12 was only up by
12.6% y-o-y, as finance costs increased 60.4% y-o-y arising from finance expenses
for the acquisition of SPP. Sunway REIT has declared a DPU of 1.87 sen for 3QFY12
which brings the total accumulated DPU for 9MFY12 to 5.61 sen. Sunway REIT continue
to register strong rental reversion of 15.8% y-o-y, thanks largely to Sunway Pyramid
Shopping Mall which has achieved a rental reversion of 17.2% y-o-y for 9MFY12
with a total 294,968 sq. ft of lettable area renewed.
Lower q-o-q. For
3QFY12, NPI rose 21.9% y-o-y to RM74.3m with stronger contribution coming from
the initial portfolio of 8 assets and Sunway Putra Place. NPI for the initial portfolio
of 8 assets expanded by 9.6% y-o-y with Sunway Pyramid Shopping Mall’s NPI growing
12.3% in 3QFY12 compared to the corresponding quarter in the preceding year. Due
to seasonal factors, revenue for 3QFY12 was lower q-o-q mainly due to lower income
from the hospitality business since 3QFY12 is traditionally a low season with leisure
activities and fewer corporate functions and banquets.
Maintain Neutral.
We maintain our forecast and Neutral recommendation on Sunway REIT at an
unchanged FV of RM1.25, which is based on target yield of 5.7% on CY12 DPU.
Source: OSK188
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