In 4QFY20, IGB Real Estate Investment Trusts’ (IGBREIT) realized net profit came in at RM72.1m (-4.2% YoY. -6.2% QoQ) which was largely within our expectations but above consensus. YTD, Group net profit of RM236.8m (-25.0% YoY) constituted 101% and 110% of our and consensus full year estimates. Going forward, management is still cautious as the second MCO (MCO 2.0) imposed on several states, including Kuala Lumpur and Selangor could continue to weigh on consumer sentiment in the near term with lower shopper footfall, lesser car traffic volume and higher temporary closure of retail shops. As such, earnings could see more downside risk due to the pandemic-related restrictions. We cut our FY21/22 earnings by -8%/-6% respectively after imputing the impact from MCO 2.0. We remain cautious and maintain our Neutral call and RM1.72 TP.

• 4QFY20 revenue rose 5.7% YoY to RM147.5m primarily due to the reversal of over-provision for rental support. However, net property income dropped 3.1% YoY to RM93.1m and correspondingly, profit after taxation was lower by 4.2% YoY to RM72.1m due to the higher allowance for impairment of trade receivables. The distributable income for the current quarter amounted to RM78.1m, consisting of realised profit of RM72.1m and the non-cash adjustments arising mainly from manager fee payable in units of RM5.6 m.

For the year, Group gross revenue was RM465.2m, declining 15.7% YoY while net property income was 20.6% lower YoY at RM316.7m which yielded profit after tax of RM236.8m (or -25% YoY) which was dragged mainly due to the rental support provided to tenants, lower car park income and higher allowance for impairment of trade receivables arising from the Covid-19 pandemic and resultant MCOs. Fair value for investment properties remained unchanged in FY20 despite the earlier fear of impairments due to pandemicdriven lockdowns.

Source: PublicInvest Research - 26 Jan 2021