Review

• KIP REIT’s 1QFY24 realised net profit of RM10.4mn (+18.2% YoY, +1.4% QoQ), came in within expectations, accounting for 23% of our full-year forecasts.

• 1QFY24 distribution per unit (DPU) stood at 1.55sen (+6.9% YoY). Based on the last closing price, this works out to a 6.9% annualised dividend yield.

• KIP REIT’s 1QFY24 realised net profit increased by 18.2% YoY, alongside a 15.6% rise in revenue. The improved performance was primarily attributable to 1) steady growth in the retail segment and 2) lease income from the three newly acquired industrial properties in Klang.

• While the QoQ revenue witnessed a marginal 0.1% decline, primarily attributed to decreased rental income from promotional areas, 1QFY24 realised net profit increased by 1.4%, underpinned by lower property expenses, including utilities and building maintenance.

Impact

• Maintain earnings forecasts.

Outlook

• Management is optimistic about KIP REIT’s prospects, driven by solid performance of the existing property portfolio, ongoing operational improvements, and a focus on high-quality investments. In addition, management commits to prudent capital management to deliver sustainable returns to Unitholders and explore growth opportunities in both retail and industrial assets.

Valuation

• We maintain our Buy recommendation on KIP REIT with an unchanged TP of RM1.04, based on unchanged target yield of 6.75% to our CY24 DPU projection of 7sen/unit.

Source: TA Research - 23 Oct 2023