KLCC Property (HOLD)

Valuing KLCC Property as a REIT

• In light of the recent re-rating of KLCC Property’s share price based on expectations of a possible REIT listing, we now re-visit our valuation methodology. 
• In our view, should a listing materialise, KLCC Property would likely to be the largest REIT in Malaysia, as its current asset portfolio is valued at more than RM10bn.
• Its relevant peers would be the premier REITs (Pavilion REIT, Sunway REIT, CMMT and the soon-to-be-listed IGB REIT), and we believe a target yield range of 5.5-6.0% is reasonable.
• Applying a target 5.7% DY, our revised TP for KLCCP is RM5.32 (previously RM4.07). Maintain HOLD.

Source: Hong Leong Investment Bank Research - 18 July 2012