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Sunway Real Estate Investment Trust
Maintain buy with a higher target price of RM1.84: We expect Sunway Real Estate Investment Trust’s (REIT) retail segment to continue recording positive growth. This segment reported a 15.1% year-on-year (y-o-y) revenue growth to RM383 million and a 13.8% y-o-y net property income (NPI) growth to RM269.5 million, due mainly to stronger performance at its flagship malls — Sunway Pyramid and Sunway Putra Mall.
After a strong financial year ended June 30, 2016 (FY16) from its hotel segment, of which revenue and NPI grew by 18.9% y-o-y and 17.2% y-o-y, respectively, we expect a softer performance in FY17, due to the closure of the Sunway Pyramid Hotel East for refurbishment, which is only expected to complete in the third quarter ending March 31, 2017 (3QFY17).
For Sunway REIT’s office segment, despite the challenging environment, we expect this segment to show improvements in occupancy rates in FY17.
Sunway REIT’s core FY16 net profit was in line with expectations at 99% and 100% of our and consensus estimates respectively. An interim distribution per unit (DPU) of 2.12 sen was declared for 4QFY16, bringing total DPU for FY16 to 9.18 sen. Strong performances in the retail and hotel segments were partly negated by a weak office segment. — RHB Research, Aug 12
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This story first appeared in TheEdgeProperty.com pullout on Aug 15, 2016, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.
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