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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 26 Nov 2021, 10:48 AM

 

Axis REIT - Resilient Performance

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Axis REIT’s (AXREIT) 3QFY21 realised net profit came in at RM37.0m (+16.2% YoY, +2.1% QoQ) which was within our expectations but below consensus. YTD, Group realised net profit excluding the reversal of doubtful debts totals RM98.2m, (+5.6% YoY) which constituted 74% and 71% of our and consensus full year estimates respectively. We adjust our FY21 realised net profit upward by 1.4% to account for the doubtful debts reversal nonetheless. For 9MFY21, Group portfolio size increased by 4 to a total of 57 properties valued at RM3.46bn. We maintain our Neutral call and DDM-derived TP to RM1.91. Key catalyst for the Group is Phase 2 of the Axis Mega Distribution Center.

  • Realised net income rose 16.2% YoY mainly due to rental from newly acquired properties, commencement of new tenancy at Axis Industrial Facility @ Rawang and also the positive rental reversion recorded for the period. This was mitigated by the drop in the amount of seasonal and visitor carpark income due to the various MCOs. 3QFY21 profit was also lifted by reversal of doubtful debt of RM1.9m. YTD, a total of RM9.9m was spent on capital expenditure on existing properties and a further RM19.7m incurred for the extension of lease of D21 Logistics Warehouse for another 30 years.
  • Group portfolio size increased by 4 to a total of 57 properties YTD with the completion of the acquisition of Indahpura Facility 2, Johor for RM8.5m on 12 January 2021, Indahpura Facility 3 in Johor for RM6.7m on 26 February 2021, Beyonics i-Park Campus Block F in Johor for RM13.0m on 3 March 2021 and Bukit Raja Distribution Centre 2 in Shah Alam for RM120.0m on 31 March 2021. All in, it has 57 assets comprising 10.9msf and 152 tenants with average occupancy of 94%.
  • Proposes placement to pare down debt. The group proposes to undertake a placement of up to 188,042,597 units or up to 13% of the total number of units issued of 1,446,481,518, to be used primarily to pare down its debt. As at 30 September 2021, the financing ratio of Axis-REIT stood at 36.6%; and the proposed placement is expected to lower its financing ratio to 27.3%. This would provide the Group with sufficient headroom to pursue opportunistic acquisitions of new properties and development projects. As for earnings dilution, the quantum would depend on the number of placement units to be issued and hence we keep our valuation unchanged for now.

Source: PublicInvest Research - 22 Oct 2021

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