HwangDBS has recommended a 'hold' stock rating for KLCC Property with a target price of RM3.70.

The securities firm noted that KLCC Property's 2010 earnings (ex-fair value gains) grew by 4 per cent to RM233 million.

Revenue rose 2 per cent, driven by office and retail segments' +3 per cent and +8 per cent respectively, which helped to mitigate the 13 per cent dip in hotel operations.

While retail turnover at Suria has returned to pre-crisis' RM2 billion and footfalls remained a high RM42 million, Mandarin Oriental saw lower occupancy rate of 55 per cent (FY09: 65 per cent) albeit stable ARR of RM636.

KLCCP has no intention to cut ARR but rather focus on product differentiation, value add promotions and cost control. Long term locked-in rental income from blue-chip tenants should continue to sustain future earnings.