31 May 2017 | 1QFY17 Results Review
Maintain BUY
AmanahRaya REIT
Expect stronger quarters ahead
Unchanged Target Price (TP): RM1.15
INVESTMENT HIGHLIGHTS
•
1QFY17 earnings in line
•
Expect stronger sequential earnings
•
Stable earnings outlook
•
Maintain BUY with unchanged TP of RM1.15
1QFY17 earnings in line. AmanahRaya REIT (ARREIT) 1QFY17 core
net income of RM8.3m came in within expectation, making up 23% of
RETURN STATS
Price (30 May 2017)
RM0.955
Target Price
RM1.15
Expected Share Price
Return
20.4%
Expected Dividend Yield
5.7%
our full year estimates. Comparison to consensus estimate is unavailable
as ARREIT is only covered by us. ARREIT declared distribution per unit
of 1.43sen for 1QFY17.
Expect stronger quarters ahead. On a sequential basis, 1QFY17 core
net income of ARREIT was stable, inched up by a marginal 0.16%qoq.
Expected Total Return
26.1%
STOCK INFO
Meanwhile, 1QFY17 core net income declined 12%yoy to RM8.3m,
mainly due to lower rental contribution from few assets namely AIC
KLCI
1,764.89
factory in Shah Alam, Holiday Villa in Alor Setar, and South City Plaza in
Seri Kembangan. While the decline in earnings in not unexpected, we
forecast stronger earnings going forward as we expect earnings
contribution from newly acquired assets (Deluge Factory in Johor,
Toshiba TEC in Bandar Glenmarie, and Contraves Building in Cyberjaya)
Bursa / Bloomberg
Board / Sector
5127/AARET MK
Main/REIT
Syariah Compliant
No
Issued shares (mil)
573.22
Market cap. (RM’m)
547.42
to make up the shortfalls.
Stable earnings outlook. We maintain our earnings forecast for
FY17/18. We estimate earnings of ARREIT to remain stable in FY17 with
our earnings growth forecast of 2%yoy, underpinned by stable rental
income from its assets. Meanwhile, we forecast FY18 to grow at
7.5%yoy mainly driven by lease renewal of SEGi University in Kota
Damansara which is its top rental contributor.
Maintain BUY with unchanged TP of RM1.15. Our TP is based on
DDM model (required rate of return: 7.7%, terminal growth rate: 1%).
We maintain our BUY recommendation on ARREIT for its education
property exposure (42% gross rental contributed from education
Price over NA
0.80
52-wk price Range
RM0.88-RM0.96
Beta (against KLCI)
0.54
3-mth Avg Daily Vol
0.13m
3-mth Avg Daily Value
RM0.13m
properties) where rental reversion is typically resilient at 5-7%. Besides,
prospect for asset management of ARREIT is positive following the entry
Major Shareholders
of Kenedix Inc. as a substantial shareholder in December 2016.
Meanwhile, dividend yield is attractive at 5.7%.
Kumpulan Wang Bersama
47.31%
KDA Capital Malaysia
15.0%
Perbadanan Kemajuan
MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT
BANK
Kindly refer to the last page of this publication for important disclosures
5.65%
MIDF RESEARCH
Wednesday, 31 May 2017
Investment Statistics
FYE Dec
FY14A
FY15A
FY16A
FY17F
FY18F
Revenue
57.2
61.9
57.4
58.7
61.7
Net Rental Income
53.9
58.1
53.3
55.0
57.9
Profit Before Tax
107.2
59.7
40.5
35.9
38.6
Net Income
107.2
59.7
40.5
35.9
38.6
Core Net Income
33.9
37.0
35.3
35.9
38.6
Basic EPS (sen)
18.71
10.41
7.07
6.26
6.73
Core EPS (sen)
5.91
6.45
6.16
6.26
6.73
Gross Dividend (sen)
6.50
6.30
5.90
6.07
6.53
Net Dividend (sen)
5.85
5.67
5.31
5.47
5.88
Net Distribution Yield
6.1%
5.9%
5.6%
5.7%
6.2%
Core PER
16.16
14.81
15.49
15.26
14.19
NAV per unit
1.15
1.19
1.20
1.21
1.22
P/NAV (x)
0.83
0.80
0.80
0.79
0.78
Core ROE
5.1%
5.4%
5.2%
5.2%
5.5%
3.1%
3.4%
3.4%
3.4%
3.6%
Core ROA
Source: MIDF Research
AmanahRaya REIT: 1QFY17 RESULTS SUMMARY
FYE Dec (RM’m, unless
otherwise stated)
Gross Revenue
Total Trust Income
Income Before Tax
Income After Tax
Core Net Income
Basic EPS (sen)
Core EPS (sen)
Gross DPS (sen)
Quarterly Results
1QFY17
15.2
14.1
8.3
8.3
8.3
1.5
1.5
1.4
%YoY
5%
-4%
-12%
-12%
-12%
-12%
-12%
-8%
%QoQ
6%
-24%
-38%
-38%
0%
-38%
0%
1%
Cumulative
FY17
%YoY
15.2
5.0%
14.1
-4.5%
8.3
-11.6%
8.3
-11.6%
8.3
-11.6%
1.5
-11.6%
1.5
-11.6%
1.4
-8.3%
2
MIDF RESEARCH
Wednesday, 31 May 2017
Daily Price Chart
Jessica Low Jze Tieng
[email protected]
03-2173 8391
Source: Bloomberg
3
MIDF RESEARCH
Wednesday, 31 May 2017
MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X).
(Bank Pelaburan)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
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MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS
STOCK RECOMMENDATIONS
BUY
TRADING BUY
NEUTRAL
SELL
TRADING SELL
Total return is expected to be >15% over the next 12 months.
Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been
assigned due to positive newsflow.
Total return is expected to be between -15% and +15% over the next 12 months.
Total return is expected to be <-15% over the next 12 months.
Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been
assigned due to negative newsflow.
SECTOR RECOMMENDATIONS
POSITIVE
The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL
The sector is to perform in line with the overall market over the next 12 months.
NEGATIVE
The sector is expected to underperform the overall market over the next 12 months.
4