KUALA LUMPUR (Aug 10): Al-Aqar Healthcare REIT (KL:ALAQAR) is now attractive following a recent decline that brought its valuations below that of its regional peers, according to an analyst.

The real estate investment trust, which mainly owns and manages hospitals under the KPJ brand, is trading at just 92% of its net asset value and 15 times the projected earnings for this year, BIMB Securities said. Parkway Life REIT, meanwhile, is trading at nearly 24 times its 2026 earnings.

“This suggests that investors can gain exposure to a defensive healthcare real estate portfolio at a more compelling valuation relative to its Singapore-listed counterparts,” the research house said.

BIMB Securities is initiating a “buy” call on Al-Aqar with a target price of RM1.48, the highest among five research houses covering the stock.

Al-Aqar, which is also Malaysia’s only Shariah-compliant healthcare trust, has declined 12% from its peak in early 2026, tracking the performance of the sector dragged by cessation of preferential rates for the withholding tax on dividends from REITs or property trust funds.

There are now three “buy” and two “hold” among five research houses tracked by Bloomberg. The average 12-month target price is RM1.33.

Al-Aqar is expected to produce a dividend yield of 6.3%-7.7% over the next three years, according to BIMB Securities’ projections. The dividend yield of 7.3% for 2027 provides an attractive 360 basis points spread over the 10-year Malaysian government bonds, the house noted.

While gearing remains elevated at 48.3%, proceeds from disposal of a college and an aged care facility by yearend will go towards repaying part of its borrowings and improve debt as a percentage of shareholder equity to under 47% in 2027, BIMB Securities said.

“The planned disposals of Jeta Gardens and KPJ Healthcare College Penang are expected to strengthen the REIT’s balance sheet through a reduction in borrowings, resulting in lower financing costs,” the research house added.