Journey to Wealth
Axis REIT - 9M12 within
Period 3Q12 / 9M12
Actual vs. Expectations 9M12 realized net income (RNI) of RM58.9m was within expectations, making up 71% of street's FY12E RNI of RM83.5m. However, it only made up 66% of our FY12E RNI because we imputed net gains on disposal of Kayangan Depot (RM5.9m; estimated recognition in 4Q12); if stripped-off, 9M12 made up 70% of our adjusted FY12E RNI of RM83.6m.
Dividends 3Q12 GDPS of 4.30 sen, including 0.08 sen non taxable portion based on 99% payout, implying 9M12 GDPU of 13.0sen.
Key Results Highlights YoY, 9M12 RNI rose 23% on the back of full/new contributions of Axis Eureka and the industrial properties in Seberang Prai and Bayan Lepas (early 1Q12). They also achieved rental reversions of 0% to +25% for 5.75% of their portfolio's NLA. Finance cost was also lower by 9% on lower gearing of 30% during most of 9M12; gearing only inched up to 34% towards end 3Q12 because the group was near completing its acquisition of Wisma Academy/Annex.
QoQ, 3Q12 RNI was slightly lower by 3% to RM19.2m largely due to flat topline growth and 10% rise in finance cost to RM5.6m due to reasons mentioned above.
Occupancy rate fell to 93.4% (2Q12: 97.7%), but it will be 'temporary' and has been reflected in our estimates (refer overleaf).
Outlook We expect placement of 90.76m new units to take place soon*. The group is negotiating RM608m asset acquisitions for FY13E.
Change to Forecasts Maintain our FY12-13E GDPU of 18.7-17.5sen, implying yields of 6.2%-5.8%, which has been adjusted for timing of placements*.
Rating Maintain MARKET PERFORM
Severe yield compressions over the year near to historical premium gross yield spread (appropriate for its market cap and asset segments) to FY13E 10-yr MGS of 3.3%, implying limited upsides from hereon.
Valuation No changes to TP of RM3.08 based on target FY13E gross yield of 5.7% or net yield of 5.1%.
Risks Office and industrial sector risks, including yielddilutive acquisitions. Sector de-rating if investors switch to higher beta developers. Upside bias risks to calls are further compressions in the 10-year MGS beyond our expected FY13E 3.3%.
Source: Kenanga
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
