AXREIT (5106) - Axis REIT - More acquisitions in 2015
Target RM3.85 (Stock Rating: ADD)
During Axis REIT's full-year FY14 analysts' briefing, we were positively surprised when management says it remains focussed on growing the REIT’s portfolio size. Axis REIT's total portfolio size has crossed the RM2bn mark after the completion of three acquisitions by end-2014. Management has already identified about RM160m worth of properties and is currently assessing them for injections into the REIT this year. Given its appetite for acquisitions, we remain positive on Axis REIT's outlook. We make no changes to our earnings forecasts and our DDM-based target price is maintained at RM3.85. Our Add call on the stock remains. Further asset injections could catalyse the stock.
What happened
We attended Axis REIT's analysts' briefing which was held at The Westin Hotel in Kuala Lumpur. The briefing was presented to a packed room of approximately 40-45 analysts and fund managers. We were positively surprised that Axis REIT's CEO, Datuk Stewart LaBrooy, continues to be positive on the acquisition front for 2015. While 2014 was already aggressive in terms of acquisitions (three properties worth RM389m was injected) and another acquisition is slated to be completed by 1Q15, we gather that Axis is just beginning its acquisition drive. Other key takeaways from the analysts' briefing are: 1) Axis REIT targets to inject RM300m-400m worth of new assets per year, and 2) FY15 earnings could be boosted by existing assets that have undergone asset enhancement initiatives (AEI), assuming it secures tenants for them.
What We Think
We remain positive on Axis REIT's outlook. While its FY14 numbers did come in below our expectations, we note that this was mainly due to the timing of the asset injections. Overal, Axis ended 2014 with 33 assets in its portfolio. The new assets would show revenue contribution from 1Q15 onwards of about RM30m p.a.. While we are excited about the earnings bump of these assets, we believe its acquisition drive would be the key catalyst moving forward.
What You Should Do
We think the stock would likely perform well amid the current weak market conditions, underpinned by the REIT’s stable earnings and dividends. Furthermore, we believe that more new acquisitions would act as a re-rating catalyst for the stock. We thus maintain our Add call on Axis REIT, with an unchanged DDM-based target price of RM3.85.
Source: CIMB Daybreak - 21 January 2015
Target RM3.85 (Stock Rating: ADD)
During Axis REIT's full-year FY14 analysts' briefing, we were positively surprised when management says it remains focussed on growing the REIT’s portfolio size. Axis REIT's total portfolio size has crossed the RM2bn mark after the completion of three acquisitions by end-2014. Management has already identified about RM160m worth of properties and is currently assessing them for injections into the REIT this year. Given its appetite for acquisitions, we remain positive on Axis REIT's outlook. We make no changes to our earnings forecasts and our DDM-based target price is maintained at RM3.85. Our Add call on the stock remains. Further asset injections could catalyse the stock.
What happened
We attended Axis REIT's analysts' briefing which was held at The Westin Hotel in Kuala Lumpur. The briefing was presented to a packed room of approximately 40-45 analysts and fund managers. We were positively surprised that Axis REIT's CEO, Datuk Stewart LaBrooy, continues to be positive on the acquisition front for 2015. While 2014 was already aggressive in terms of acquisitions (three properties worth RM389m was injected) and another acquisition is slated to be completed by 1Q15, we gather that Axis is just beginning its acquisition drive. Other key takeaways from the analysts' briefing are: 1) Axis REIT targets to inject RM300m-400m worth of new assets per year, and 2) FY15 earnings could be boosted by existing assets that have undergone asset enhancement initiatives (AEI), assuming it secures tenants for them.
What We Think
We remain positive on Axis REIT's outlook. While its FY14 numbers did come in below our expectations, we note that this was mainly due to the timing of the asset injections. Overal, Axis ended 2014 with 33 assets in its portfolio. The new assets would show revenue contribution from 1Q15 onwards of about RM30m p.a.. While we are excited about the earnings bump of these assets, we believe its acquisition drive would be the key catalyst moving forward.
What You Should Do
We think the stock would likely perform well amid the current weak market conditions, underpinned by the REIT’s stable earnings and dividends. Furthermore, we believe that more new acquisitions would act as a re-rating catalyst for the stock. We thus maintain our Add call on Axis REIT, with an unchanged DDM-based target price of RM3.85.
Source: CIMB Daybreak - 21 January 2015
