Axis  REIT’s  4Q14  results  came  in  within  our  estimates  but  slightly below  consensus. Maintain  NEUTRAL  and MYR3.55  TP  (0.8%  upside), pending a briefing later today.  The REIT announced total FY14 DPU of 19.75  sen,  up  6.8%  YoY.  It  has  also  completed  some  of  its  proposed acquisitions  back  in  December,  and  we  expect  these  assets  to  start contributing positively from FY15 onwards.

Within  expectations.  Axis  REIT’s  4Q14  core  net  profit  of  MYR19.3m (+2.3%  QoQ,  -9.9% YoY)  brought  FY14 core net profit  to MYR81.3m (-3.8% YoY), in line with our estimates but slightly below consensus. The REIT  announced  a  distribution  per  unit  (DPU)  of  4.15  sen  for  4Q14, bringing  total  FY14  DPU  to  19.75  sen,  up  6.8%  YoY.  The  REIT  also announced a revaluation gain of MYR5.1m this quarter.

Updates on new acquisitions.  Axis REIT  announced in December that it  has  completed  the  acquisitions  of  Axis  MRO  Hub,  Axis  Shah  Alam DC3 and the sale and leaseback of the industrial facility in SiLC, Johor. In addition, it  has also completed the placement of 83.6m new units as part-funding for the said acquisitions. Recall that Axis REIT has accepted a  letter  offer  to  purchase  an  industrial  facility  in  Prai  for  a  total consideration  of  MYR38m.  Given  that  the  acquisitions  were  only completed  in  December,  we  expect  the  assets  to  only  contributesignificantly  from  1Q15  onwards.  4Q14  gearing  was  stable  at  about 32.8%, still below Axis REIT’s internal gearing cap of 35%.

Earnings  forecast.  We revise  our  FY15/16  earnings  forecasts  by less than 5% after updating our FY14 numbers. We also introduce  our FY17 figures.

Maintain  NEUTRAL.  Our  DDM-based  TP  is  maintained  at  MYR3.55, pending  a  briefing  later  today.  We  believe  that  more  yield-accretive acquisitions could be in the cards going forward to further drive earnings growth.

Source: RHB