Axis REIT to see sustained earnings in 2H, says HLIB

• In a note on Wednesday, the research house said the results were within house and consensus full-year estimates at 48%.

KUALA LUMPUR (July 24): Hong Leong Investment Bank (HLIB) Research has maintained its 'buy' rating for Axis REIT (KL:AXREIT) at RM1.87, with a lower target price of RM2.03 (from RM2.04), saying the real estate investment trust's quarterly core net profit of RM39.6 million, which was 1.1% lower quarter-on-quarter but 17.2% higher year-on-year, brought the sum to RM79.6 million for the first half ended June 30, 2024 (1HFY2024).

In a note on Wednesday, the research house said the results were within house and consensus full-year estimates at 48%.

“Axis should continue to see sustained earnings in the subsequent quarters, on the back of three recently completed acquisitions, two pending acquisitions and a disposal, and stable occupancy rates.

“After including contributions from the recently completed acquisitions, our FY2024/FY2025 forecasts increased by 3.7%/1.9% respectively,” the house said.

Meanwhile, HLIB said Axis REIT’s gross rental income increased slightly by 1.3%, attributable to new acquisitions and positive rental reversions. 

However, it said as a result of higher total property expenditure (+1.8%) and financing cost (+9.3%), core net profit dipped slightly by 1.1%. 

HLIB said that out of the 17.6% of total net lettable area up for renewal in FY2024, 52% of tenancies have renewed, while an additional 8.6% has been re-tenanted. 

“For these reasons, it is evident that earnings will be sustained in the subsequent quarters,” it noted.

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