SUNREIT (5176) : Sunway REIT - Sunway Pyramid leads the way
Target RM1.53 (Stock Rating: HOLD)
Sunway REIT’s 1Q15 core net profit of RM63.5m, which grew by 14.5% yoy, was largely in-line, at 24% of our and 26% of consensus full-year forecasts. Revenue growth of 13.6% yoy was driven by Sunway Pyramid's revenue, which was boosted by rental reversions undertaken in FY14. Our DDM-based target price is raised to RM1.53, from RM1.40 previously, as we roll forward our valuation base year. Although the results were in line, we think the earnings outlook for Sunway REIT would remain subdued until the opening of its Sunway Putra Mall by end-FY15. The absence of catalysts in the meantime keeps our rating for the stock at Hold.
1Q15 DPU of 2.3 sen
Sunway REIT declared a first interim DPU of 2.3 sen, in line with our estimates as it accounts for 25% of our full-year DPU forecast of 8.9 sen. Looking ahead, we expect DPU growth to be driven by the reopening of Sunway Putra Mall.
1Q15 results review
Sunway REIT's 1Q15 revenue grew by 13.6% yoy driven by Sunway Pyramid's revenues which grew by 14.6% yoy to RM69.1m. The strong growth achieved by Sunway Pyramid was underpinned by higher rentals following the major rental reversions and new tenancies undertaken in FY14. Approximately 1m sq ft was renewed with double-digit rental reversions. Net property income (NPI) grew by 12.2% yoy as property operating expenses were higher during the quarter due to higher utilities costs given the electricity tariff hike which took effect earlier this calendar year. Core net profit for the quarter grew by 14.5% yoy to RM63.4m, while distributable profit stood at RM67.4m, representing a 14.8% yoy growth over its 1Q14 distributable profit of RM58.7m.
Conference call highlights
Approximately 10-15 analysts dialled in for Sunway REIT's conference call. There were no major surprises or any key developments during the call, which was hosted by Ser Chiew Yee, Sunway REIT's IR. Aside from the reopening of Sunway Putra Mall by the end of the financial year, we see little in terms of catalysts that could rerate the stock.
Source: CIMB Daybreak - 07 November 2014
Target RM1.53 (Stock Rating: HOLD)
Sunway REIT’s 1Q15 core net profit of RM63.5m, which grew by 14.5% yoy, was largely in-line, at 24% of our and 26% of consensus full-year forecasts. Revenue growth of 13.6% yoy was driven by Sunway Pyramid's revenue, which was boosted by rental reversions undertaken in FY14. Our DDM-based target price is raised to RM1.53, from RM1.40 previously, as we roll forward our valuation base year. Although the results were in line, we think the earnings outlook for Sunway REIT would remain subdued until the opening of its Sunway Putra Mall by end-FY15. The absence of catalysts in the meantime keeps our rating for the stock at Hold.
1Q15 DPU of 2.3 sen
Sunway REIT declared a first interim DPU of 2.3 sen, in line with our estimates as it accounts for 25% of our full-year DPU forecast of 8.9 sen. Looking ahead, we expect DPU growth to be driven by the reopening of Sunway Putra Mall.
1Q15 results review
Sunway REIT's 1Q15 revenue grew by 13.6% yoy driven by Sunway Pyramid's revenues which grew by 14.6% yoy to RM69.1m. The strong growth achieved by Sunway Pyramid was underpinned by higher rentals following the major rental reversions and new tenancies undertaken in FY14. Approximately 1m sq ft was renewed with double-digit rental reversions. Net property income (NPI) grew by 12.2% yoy as property operating expenses were higher during the quarter due to higher utilities costs given the electricity tariff hike which took effect earlier this calendar year. Core net profit for the quarter grew by 14.5% yoy to RM63.4m, while distributable profit stood at RM67.4m, representing a 14.8% yoy growth over its 1Q14 distributable profit of RM58.7m.
Conference call highlights
Approximately 10-15 analysts dialled in for Sunway REIT's conference call. There were no major surprises or any key developments during the call, which was hosted by Ser Chiew Yee, Sunway REIT's IR. Aside from the reopening of Sunway Putra Mall by the end of the financial year, we see little in terms of catalysts that could rerate the stock.
Source: CIMB Daybreak - 07 November 2014
