Real Estate Investment Trust

Providing stability against volatility

• The recent volatility has sent stocks across Bursa Malaysia into a bloodbath as investors scrambled to offload their holdings for various reasons such as the souring US-China trade relations, domestic political uncertainty, mixed bag of economic data and toppish valuations following the run-up in recent months.

• We reckon that choppiness may prevail as investors are also taking this opportunity to offload their holdings ahead of the end of blanket loan moratorium. At the same time, investors are opting to stay at the side lines due to the lack of fresh catalysts.

Trading Catalyst

• Sunway Real Investment Trust (SUNREIT) is regarded as one of the largest diversified REITs in Malaysia. As of 30th June 2020 (4QFY20), SUNREIT owns 17 properties in Malaysia and maintained a healthy average occupancy rate across each segments retail (95%), hotel (53%), office (78%), services and industrial (100%).

• SUNREIT is embarking on the expansion of Sunway Carnival Shopping Mall with approximately additional 350,000sqf of new space upon completion in 2021. The recent launch of “Ke Sana Ke Sini Ke Sunway” campaign delivered exceptional response with 18,000 room nights were sold in a span of weeks.

Technical Outlook

• Price has formed a double bottom formation along RM1.50 in early-August 2020 before staging a gradual recovery. The recent breakthrough above RM1.61 may target the next resistance of RM1.70-1.78 with long term target at RM1.90. Support is set at around RM1.55, while cut loss point at RM1.54.

Trading Catalyst

• Pavilion Real Investment Trust (PAVREIT) is ranked as the largest Malaysia retail mall in terms of valuations with portfolio consist of Pavilion Kuala Lumpur Mall, - Elite Pavilion Mall, Intermark Mall, Da Men Mall and Pavilion Tower.

• We like PAVREIT for their Pavilion Malls that are well positioned as a favourite tourist destination for premium shopping in the city centre of Kuala Lumpur. Despite the plunge of tourist’s arrivals in 2020, we reckon that domestic consumption will provide some cushion to the aforementioned weakness.

Technical Outlook

• PAVREIT has been traded in a rangebound manner over the past month as price lingers within the daily EMA20 level. Following the gapped up and breakout above RM1.58, price may head higher towards the next resistance of RM1.70-1.75, levels with long term target at RM1.82. Support is located at around RM1.52 level, while cut loss point at RM1.51.

Source: Mplus Research - 9 Sept 2020