Highlights

Axis REIT- Steady Earnings

Date: 27/08/2020

Source  :  PUBLIC BANK
Stock  :  AXREIT       Price Target  :  1.91      |      Price Call  :  HOLD
        Last Price  :  2.14      |      Upside/Downside  :  -0.23 (10.75%)
 


Axis REIT (AXREIT) registered 2QFY20 realised net profit of RM31.1m (+7.0% YoY, +6.2% QoQ) which is within our and consensus expectations. YTD, Group realized net profit of RM60.4m (8.6& YoY) constituted c.49% and c.47% of our and consensus full year estimates. During the quarter, AXREIT completed the acquisition of D37c Logistics Warehouse on 9 June 2020 which increased the property portfolio size of the Group from 50 to 51 properties as at 30 June 2020. Our earnings estimates are kept unchanged. Maintain Neutral call though we increase our DDM-derived TP to RM1.91 (from RM1.77 previously) after imputing lower risk-free rate. Key catalyst for the Group is Phase 2 of the Axis Mega Distribution Center.

  • Realised net income increased by 5.5% for 1H2020 YoY which was partly due to The Axis Facility @ Batu Kawan development project which has been successfully handed over to Federal Express Services (M) Sdn Bhd and rental had commenced on 1 March 2020. So far, it has also completed the acquisition of Axis Facility 2 @ Nilai for RM50.0m on 28 February 2020, the acquisition of Axis Facility 2 @ Bukit Raja for RM37.0m on 17 March 2020 and the acquisition of D37c Logistics Warehouse for RM65.0m on 9 June 2020. Separately, it also signed the sale & purchase agreement to acquire a warehouse facility for RM95.0m yesterday, located in Section 15, Shah Alam, Selangor.
  • Limited negative pandemic impact. We believe that Axis REIT has benefitted from the pandemic by way of increase in demand for warehousing space as e-commerce took off during this period. We understand that Axis REIT was offering only rental assistance (instead of rebates) by allowing payment deferments. We believe that that AXREIT could see its portfolio expand further from 51 assets currently with acquisition targets worth RM120m. Total assets under management is currently at RM3.3bn with financing ratio at 31%.

Source: PublicInvest Research - 27 Aug 2020

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AXREIT 2.14 +0.02 (0.94%) 212,100 

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