In a recent announcement, Malaysia's largest retail-industry real estate investment trust, Pavilion Real Estate Investment Trust (PAVREIT, 5212), revealed an outstanding quarterly report, showcasing a historic high in revenue. How did PAVREIT achieve such remarkable results? Let's delve into the latest performance of the company.

Revenue Comparison (YoY +47.54%, QoQ +4.51%)

For the fourth quarter ending December 31, 2023, the company reported approximately RM208.22 million in revenue, a substantial increase of about 47.54% compared to the same period last year (4Q22), which recorded around RM141.12 million. The surge in income can be attributed to the rental income generated from the new retail mall, Pavilion Bukit Jalil, acquired by the company on June 1, 2023. Additionally, increased occupancy rates and rental income from existing retail malls also contributed to the heightened revenue for the quarter.

For information, Pavilion Kuala Lumpur Mall led the contributions with approximately RM129.12 million in revenue, marking a roughly 14.71% year-on-year increase. Following closely are Elite Pavilion Mall, Intermark Mall, and Pavilion Tower, with revenues increasing by approximately 29.41%, 0.57%, and 14.74%, amounting to RM21.61 million, RM6.29 million, and RM2.66 million, respectively.

However, DA MEN Mall experienced a year-on-year decline of approximately -14.63%, reaching around RM2.81 million. As for Pavilion Bukit Jalil, it contributed approximately RM45.70 million in revenue for the quarter.

In comparison to the previous quarter, the company's revenue increased by approximately RM6.01 million or 4.51%. Aside from the increased rental income, there was also a significant growth in revenue from advertising and marketing activities.

Summing up PAVREIT's full-year revenue for the 2023 fiscal year, it amounted to approximately RM723.81 million, reflecting a growth of around 31.28% compared to the 2022 fiscal year.

Net Profit Comparison (YoY +5.47%, QoQ +223.37%)

Driven by robust rental income, PAVREIT achieved a net profit of approximately RM228.26 million for this quarter, representing an increase of about 5.47% compared to the same period last year. However, this quarter's net fair value gain decreased by approximately 3.20% compared to 4Q22.

Furthermore, PAVREIT's total net property income increased by approximately 38.97% year-on-year, reaching around RM134.64 million.

Comparing to the previous quarter, PAVREIT's net profit saw a substantial increase of approximately RM157.68 million or 223.37%. This was attributed to a net fair value gain of approximately RM146.53 million in this quarter. Adjusted for this gain, PAVREIT's net profit increased by approximately 15.79% on a quarter-on-quarter basis.

Finally, PAVREIT's net profit for the full fiscal year of 2023 is approximately RM431.79 million, representing an increase of around 8.54% compared to the previous fiscal year of 2022.

PAVREIT also announced a dividend of RM0.0460 per unit for this quarter (where RM0.0443 is taxable, and the remaining RM0.0017 is tax-exempt). The ex-dividend date is February 8, with payment scheduled for February 29, 2024.

Outlook

The retail industry growth rate in Malaysia is expected to rise to 3.50% in 2024. However, new tax policies and targeted subsidy adjustments may make it challenging to contain cost inflation. Consequently, private consumption is anticipated to slow down in 2024 compared to 2023.

Nevertheless, with the support of robust domestic and external demand, Malaysia's Gross Domestic Product (GDP) is projected to grow between 4% and 5% in 2024. In light of this, PAVREIT plans to introduce more attractive regional tourism activities to stimulate visitor engagement and spending.

With a current price-earnings ratio of approximately 10.74 times and a dividend yield of around 7.09%, is PAVREIT capturing the interest of our readers?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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