Sunway REIT (SREIT) registered 5QFY21 (18-month: FY21) realised net profit of RM41.0m, bringing YTD realised net profit to RM179.2m which is within our expectation though below consensus. YTD, Group realised net profit constitutes c.86% and c.76% of our and consensus full year (18-month) estimates. The current cumulative financial period is a period of 15 months from 1 July 2020 to 30 September 2021. As such, there are no comparative figures for the preceding year’s corresponding period. YTD gross revenue was mainly driven by Retail segment (RM311.6m), Hotel (RM40.0m), Office (RM82.6m), Services segment (RM75.9 m) and Industrial & others (RM7.7 m). Gross revenue was marginally lower due to lower contribution from the Retail segment which was impacted by the implementation of Enhanced Movement Control Order (EMCO) and National Recovery Plan (NRP) Phase. This was however partially mitigated by higher gross revenue from the Office and Services segments. Net property income (NPI) rose 3.6% YoY to RM70.5m due to lower property operating expenses. All told, we maintain our Neutral call and TP of RM1.55.
- Retail segment’s realised gross revenue dropped 17% to RM64.9m compared to 1QFY21 (Jul – Oct 2020), mainly due to lower rental and carpark income during the NRP (Phase 1) in 5Q2021 compared to RMCO in 1QFY21. As such, NPI correspondingly also decreased by 17% to RM36.6m. We understand that the Retail segment has already recorded encouraging recovery in 1QCY21 (Jan – Mar 2021) following the easing of movement restrictions before the momentum was curtailed by resurgence of COVID-19 cases which led to the re-introduction of targeted restrictive movement measures. YTD, the Retail segment recorded gross revenue of RM311.6m and NPI of RM164.1m. The average occupancy rate for the Retail segment remained stable at above 90%.
- Hotels registered gross revenue of RM6.2m in 5QFY21, improving from RM2.8m a year ago mainly due to guaranteed rent from Sunway Putra Hotel. NPI correspondingly increased by RM3.0m compared to 1Q2021. YTD, hotels contributed gross revenue of RM40.0m and NPI of RM31.9m largely supported by guaranteed income from Sunway Clio Property (comprising Sunway Clio Hotel and Sunway Clio Retail), Sunway Putra Hotel and Sunway Hotel Georgetown. Sunway Resort Hotel remained closed during the period due to ongoing refurbishment.
- Office contribution higher due to new asset. Group office segment registered gross revenue of RM18.9m in 5QFY21 or an increase of 81% YoY mainly due to the new income contribution of RM8.8m from “The Pinnacle Sunway” which was acquired on 20 November 2020. NPI correspondingly increased by RM6.5m.
Source: PublicInvest Research - 10 Nov 2021