Affin Hwang Capital Research Highlights

Author: kltrader   |   Latest post: Tue, 24 Nov 2020, 4:57 PM


Axis REIT (HOLD, Maintain) - 3Q20 Realised Profit Grew 2.4% Qoq, But Below Expectations

Author:   |    Publish date:

  • Axis REIT reported a higher 3Q20 realised net profit of RM31.8m (+2.4% qoq) on rental contributions from a newly acquired property and higher carpark income.
  • However, the results were slightly below market and our expectations due to higher maintenance expenses.
  • Maintain HOLD with an unchanged 12-month price target of RM1.97. At a 4.6% 2021E distribution yield, the valuation looks fair.

3Q20 Realised Net Profit Grew 2.4% Qoq

Axis REIT reported a decent set of results – 3Q20 realised net profit increased by 2.4% qoq to RM31.8m on the back of 3.4% higher revenue qoq to RM57m, attributable to the commencement of rental from 1 newly acquired property during the quarter and higher carpark income. Recall that AXREIT provided a seasonal carpark rental waiver for its multi-tenanted buildings during the MCO period. This was, however, dampened by a 7.1% increase in maintenance expense. In tandem with better earnings, the quarterly DPU was higher at 2.25 sen (+4.7% qoq).

9M20 Earnings Came in Higher

Cumulatively, Axis REIT’s 9M20 realised net profit came in higher at RM92.8m, (+8.2% yoy), driven by 3.6% growth in revenue to RM166.7m attributable to rental from newly acquired / commenced properties. Financing costs were also 20% lower yoy due to lower gearing from the equity placement exercise in 4Q19 and the lower interest rate environment. At 72-73% of the street’s and our full-year earnings forecasts, Axis REIT’s 9M20 earnings were slightly below both expectations. The variation to our forecast was due to the higher maintenance expense. Management declared a 9M20 DPU of 6.50 sen, 7.9% lower yoy due to the increase in share base arising from a share placement exercise in December 2019.

Maintain HOLD With An Unchanged DDM-derived Target Price of RM1.97

We lowered our 2020 EPS forecast by 2.9% to incorporate the higher maintenance cost and delays in completion of property acquisitions due to slower progress during this pandemic period. However, we maintain our 2021-2022 EPS forecasts. Overall, we maintain our HOLD rating on Axis REIT with an unchanged target price of RM1.97. At a 4.6% 2021E distribution yield, Axis REIT’s valuation looks fair considering its relatively stable earnings outlook. Upside risk: strong earnings driven by robust demand for industrial / logistic assets; downside risks include weaker-than-expected earnings due to lower rentals / offering of rental rebates and unexpected spikes in global bond yields.

Source: Affin Hwang Research - 22 Oct 2020

Share this
Labels: AXREIT

Related Stocks

Chart Stock Name Last Change Volume 
AXREIT 2.13 +0.03 (1.43%) 758,300 

  Be the first to like this.
20/11/2020 10:29 AM

I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Perform Technical & Fundamental Analysis on Stocks
MQ Affiliate
Earn rewards by referring your friends

529  557  546  538 

Top 10 Active Counters
 KANGER 0.185+0.005 
 AT 0.200.00 
 BINTAI 0.795+0.10 
 KGROUP 0.060.00 
 MTRONIC 0.115+0.005 
 ASIABIO-OR 0.015+0.005 
 IRIS 0.36+0.005 
 VIVOCOM 1.01+0.205 
 FINTEC 0.105+0.01 
 SOLUTN 1.27+0.15 


1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!