Period 2Q14/1H14
Actual vs. Expectations 1H14 realized distributable income (RDI) of RM313m came in within expectations, making up 47% of consensus and 49% of our full-year estimates.
Dividends 2Q14 GDPS of 8.05 sen (3.29 sen single tier dividend plus 4.76 sen subject to 10% withholding tax), bring 1H14 GDPS to 16.7 sen or 50% of our FY14E GDPS of 33.5 sen (5.2% yield).
Key Results Highlights QoQ, topline declined by 2% as retail and hotel revenues fell by 6% and 10%, respectively, which could possibly be attributed to 2Q being seasonally weak post 1Q festivities. RDI slipped by 10%, largely dragged down by one-off refinancing costs, which caused an 80% increase in finance cost.
Ytd-YoY, 1H14 revenue rose by 8% which was largely driven by better: (i) retail segment (+9%) on the back of higher rental reversions and (ii) hotel segment (+19%) from commencement of non-room revenue generation post refurbishment of its ballrooms. RDI grew 36% due to the stapled REIT structure being effective from 2Q13, which resulted in lower taxation structure.
Outlook The group has obtained its shareholders’ approval in the recent AGM (17-Apr) for up to 10% placement, which should raise funds of between RM1.1b-RM1.2b. It was mentioned in the media that it will be used for potential asset acquisitions within KL’s Golden Triangle (GT). Potential assets are: (i) the remaining stake in Suria KLCC not owned (only 60% owned), (ii) assets under the parent, (KLCC Convention Centre, Traders Hotel and Impiana Hotel), and (iii) third party assets within the GT.
We look forward to the upcoming analysts’ briefing this Wednesday for further updates, including Lot D1 developments and Dayabumi AEIs.
Change to Forecasts We make no changes to FY14E and FY15E earnings.
Rating Maintain OUTPERFORM
Valuation Maintain TP of RM6.90 based on an unchanged target gross/net yield of 5.00% / 4.72% on average FY15E GDPS/NDPS of 34.5 sen / 32.6 sen (refer overleaf). We believe the stock will see excitement as newsflow of potential acquisition unfolds.
Risks to Our Call Upsides include asset injections and yield expansions. Downsides risks include weaker hotel earnings and expansion in the 10-yr MGS.
Source: Kenanga
Chart | Stock Name | Last | Change | Volume |
---|