Review

• Excluding the one-off expenses incidental to acquiring KIPMall Kota Warisan of RM1.7mn, KIP REIT’s 9MFY24 realised net profit of RM33.0mn (+12.9% YoY) was within expectations, accounting for 71% of our full-year forecasts.

• 3QFY24 DPU stood at 1.6sen/unit, bringing 9MFY24 DPU to 4.7sen/unit (+5.6% YoY). Based on the last closing price, this works out to an annualised dividend yield of 7.0%.

• YoY, KIP REIT’s 9MFY24 realised net profit increased by 12.9%, alongside a 13.3% rise in revenue. The stellar performance was primarily attributable to improved occupancy rates for the retail segment and the maiden income contribution from KIPMall Kota Warisan following its acquisition completion on 8th Feb 2024.

• QoQ, KIP REIT’s 3QFY24 realised net profit grew 12.3% to RM12.0mn, on the back of 8.6% growth in revenue. The sequential improvement was mainly driven by higher retail occupancy rates and additional lease income from KIPMall Kota Warisan.

Impact

• Maintain earnings forecasts.

Outlook

• Management is optimistic about KIP REIT’s prospects, citing the strong performance of the existing property portfolio and continuous efforts to improve leasing and operational initiatives. Furthermore, the management is dedicated to prudent capital management, aiming to deliver sustainable returns to unitholders and actively exploring growth opportunities in both retail and industrial assets.

Valuation

• We maintain our Buy recommendation on KIP REIT with an unchanged TP of RM1.14, based on a target yield of 6.75% to our CY25 DPU projection of 7.7sen/unit.

Source: TA Research - 24 Apr 2024