Highlights

Kenanga Research & Investment

Author: kiasutrader   |   Latest post: Thu, 3 Dec 2020, 8:42 AM

 

MREITs - Cherry Pick Hardy MREITs for Harsh CY20

Author:   |    Publish date:


Maintain NEUTRAL. CY20 will undoubtedly be one of the most challenging years for MREITs in recent history given the threat of Covid-19 pandemic on all facets of the economy. YTD, MREITs’ share prices were not spared, down 3% to 44% save for AXREIT (+1%), with MREITs’ with weaker asset profile took a heavier beating. Retail and hospitality MREITs’ tenants would be hardest hit by the MCO while office and industrial tenants would likely feel the pinch if this situation prolongs. Additionally, valuations are also under threat with a rising 10-year MGS (to 3.58% currently) on concerns of rising Covid-19 cases as well as the health of the Malaysian economy given the sharp dip in oil prices, while MREITs’ valuations are further impacted by risk-off stance in the equity markets as most investors prefer cash under current circumstances. We prioritise MREITs with strong value and capital preservation over high yields at this juncture, and MREITs that have the ability to be the first movers once the Covid-19 is resolved. Post rolling forward our valuations to FY21 and increasing our MGS target to 3.70%, our preferred picks are KLCC (MP; TP: RM7.45) on 5.1% yield and IGBREIT (MP; TP: RM1.50) with 5.7% yield for their balance sheet strengths.

A virus that does not discriminate, defensive MREITS have not been spared. 2020 has been a tumultuous year thus far, but nothing has disrupted markets quite as much as the fears and uncertainty surrounding Covid-19 which surfaced in Jan 2020. The impact has been felt globally and MREITs known for their defensiveness were not spared either (refer to Graph below). As a result, MREITs under our coverage have declined sharply, between -3% to - 44%, save for AXREIT which was up 1% YTD. MQREIT and CMMT saw the steepest declines at 44% and 22%, respectively, likely as investors remain cautious of the asset quality and tenant profiles which may come under pressure due to Covid-19. Meanwhile, AXREIT (+1%) and KLCCSS (-3%) held up the best as they have a more stable tenant profile on longterm leases. This is despite the fact that all MREITs’ results came in within expectation during

Source: Kenanga Research - 3 Apr 2020

Share this

Related Stocks

Chart Stock Name Last Change Volume 
KLCC 7.60 -0.06 (0.78%) 323,400 
IGBREIT 1.70 +0.01 (0.59%) 2,096,700 
AXREIT 2.06 +0.04 (1.98%) 3,774,100 
CMMT 0.625 +0.015 (2.46%) 782,400 
PAVREIT 1.52 0.00 (0.00%) 879,300 
SUNREIT 1.51 0.00 (0.00%) 1,755,800 
MQREIT 0.89 +0.02 (2.30%) 272,700 

  Be the first to like this.
 
RainT READ
27/04/2020 2:35 PM


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Stock Screener using Technical and Fundamental criteria
MQ Affiliate
Join the MQ Affiliate Program today to earn rewards
 
 

793  394  531  415 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 YONGTAI 0.295+0.125 
 SAPNRG 0.12+0.005 
 BINTAI 1.14+0.295 
 TOPBLDS 0.13+0.045 
 KANGER 0.175+0.005 
 ARMADA 0.355+0.035 
 KNM 0.21+0.005 
 TRIVE 0.0150.00 
 AT 0.185-0.01 
 AGES 0.145+0.02 

FEATURED POSTS

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!
PARTNERS & BROKERS