KUALA LUMPUR (Oct 30): PublicInvest Research and CGS-CIMB Research have kept their target prices (TPs) for Axis Real Estate Investment Trust (Axis REIT) unchanged, following its recently announced financial results for the third quarter ended Sept 30, 2023 (3QFY2023).
In a note on Monday, PublicInvest kept its dividend discount model (DDM)-derived TP for Axis REIT unchanged at RM1.96, and maintained its "neutral" call.
The research house said Axis REIT's 3QFY2023 realised net profit of RM37.9 million — down 4.4% year-on-year (y-o-y) but up 2.9% quarter-on-quarter (q-o-q) — is still lagging the research firm’s and consensus full-year forecasts. The REIT's realised net profit of RM103.9 million for the nine-month period (9MFY2023), which declined 14.2% y-o-y, only constituted about 67% of the research firm's and consensus full-year estimates.
PublicInvest adjusted its earnings estimates for Axis REIT downwards by 6% for FY2023 and FY2024, and by 5% for FY2025, after revising its occupancy assumptions and imputing higher costs, adding that the REIT's portfolio size remained unchanged at 62 properties valued at RM4.4 billion, with average occupancy of 92%.
CGS-CIMB, meanwhile, in a note reiterated its "add" rating for Axis REIT, with an unchanged DDM-based TP of RM2.01, given the REIT's diversified property portfolio and exposure to industrial assets.
The research firm said Axis REIT's 9MFY2023 core net profit of RM103.6 million (down 14.9% y-o-y) came in at 65% of its FY2023 forecast, adding that it expects earnings to come in stronger q-o-q in 4QFY2023, following the completion of Bukit Raja Distribution Centre 2 in August.
"We continue to like its diversified portfolio consisting of logistics warehouse, industrial, manufacturing facilities and hypermarkets, as well as its early foray into the industrial property segment, which would allow the group to specialise in this increasingly important property segment, in our view," it said.
CGS-CIMB also said it is positive on Axis REIT’s acquisitions, especially in the increasingly in-demand industrial property segment.
Meanwhile, Kenanga Research said it revised up its TP for Axis REIT to RM1.58 (from RM1.55 previously), but maintained its "underperform" call. It raised its FY2024 earnings forecast for the REIT by 2%.
Kenanga said Axis REIT’s 9MFY2023 core net profit met the research firm's expectations at 76% of its full-year forecast, but disappointed the market at only 67% of the full-year consensus estimate.
The outlook for industrial properties was weighed down by incoming new supply, it said.
Axis REIT had kept an acquisition target of RM170 million for FY2023, said Kenanga, noting that in the context of the current surge in the supply of industrial properties, the REIT may face heightened competition as potential tenants may be spoilt for choice.
The REIT's net property income (NPI) for 3QFY2023 increased marginally by 0.67% y-o-y to RM61.9 million, while revenue edged slightly higher by 0.14% to RM71.81 million.
For 9MFY2023, NPI declined by 2.1% y-o-y to RM179.27 million, while revenue fell by 0.23% to RM210.44 million.
At the midday break on Monday, Axis REIT was unchanged at RM1.80, with a market capitalisation of RM3.13 billion.