Tuesday, 6 June 2017

(NST) Neutral outlook retained from REIT sector

KUALA LUMPUR: MIDF Research has maintained its neutral outlook for the REIT sector.

This follows the recent wrap-up of the reporting season on 1QCY2017 which saw REITs post mixed results.

Among the seven REITs under MIDF Research's coverage, Sunway REIT, IGB REIT, and Axis REIT had positive earnings growth while four (AmanahRaya REIT, Pavilion REIT, CMMT, and KLCCP Stapled Group) performed negatively.

The research house said that following the 1QCY17 earnings reporting season, its earnings estimates and target prices for the respective REITs under coverage were left unchanged as earnings of REITs were in line with expectations.

"Recommendations for REITs under our coverage remain intact. REITs with buy calls include Sunway REIT (target price: RM1.88) and AmanahRaya REIT (TP: RM1.15); while REITs with neutral calls are Axis REIT (TP: RM1.68), IGB REIT (TP: RM1.73), KLCCP Stapled Group (TP: RM7.60), CMMT (TP: RM1.69), and Pavilion REIT (TP: RM1.77)," MIDF Research wrote today.

The research house highlighted that Sunway REIT reported the highest quarterly earnings growth of 8.6 per cent year-on-year in 1QCY17 with cumulative earnings growing 5.6 per cent, driven by the higher earnings contribution from Sunway Pyramid, Sunway Carnival, and Sunway Putra Mall.

IGB REIT recorded the second highest quarterly earnings growth of 3.5 per cent y-o-y and this was driven by strong earnings from Mid Valley Megamall and Gardens Mall.