RHB Research raised its FY25 and FY26 earnings forecasts by 10%.
PETALING JAYA: Axis Real Estate Investment Trust’s (Axis-REIT) active acquisition strategy will continue to drive earnings and distribution per unit (DPU) growth.
Healthy demand for industrial space underpins positive rental reversion and thus support earnings growth in the medium to long term, said MIDF Research.
Axis REIT has a total estimated value of target acquisitions of RM220mil. MIDF Research maintains its earnings forecast for financial years 2024 (FY24) and FY25 and 2026.
RHB Research in contrast raised its FY25 and FY26 earnings forecasts by 10% after factoring in the finance cost savings from the proposed placement.
However, its target price (TP) is lowered to RM2.08 a share due to the dilutive impact to DPU.
Year-to-date, Axis-REIT has completed seven acquisitions totalling RM671mil across Selangor, Pahang, and Negri Sembilan, and is in the process of acquiring a further RM87mil worth of properties in Selangor.
To fund these new acquisitions, it has proposed its largest private placement, aiming to issue up to 263 million new units (15% of its issued units) to raise up to RM455mil to pare down its borrowings.
This would reduce the REIT’s gearing ratio from a projected 44% at end-October to 33%, giving it more headroom for further acquisitions.
Kenanga Research said given the fact that industrial assets are now experiencing yield compression due to landlords raising asset prices at a pace faster than the rate of rental reversions, it does not foresee Axis-REIT continuing acquiring assets as aggressive as in the first half of FY24.
Maybank Investment Bank (Maybank IB) Research expects improved earnings outlook in FY25 on full-year contribution from new assets – acquisition this year is the highest at RM700mil.
It maintains its FY24 to FY26 earnings and assumptions. Near term earnings growth to be mainly driven by new assets, improved portfolio occupancy and positive rental reversions.
It expects a stronger sequential fourth quarter of this financial year (4Q24) coming from two new assets.
UOB Kay Hian Research said it declared a 2.35 sen dividend for 3Q24 (up 4.4% quarter-on-quarter, a 9.3% increase year-on-year (y-o-y), bringing nine months 2024 dividend to 6.90 sen (up 10% y-o-y).
This was within its expectations and represents an annualised yield of 5.1%.
It retains its “hold’’ call with at TP of RM1.92 a share, while Maybank IB Research, RHB Research, Hong Leong Investment Bank Research and MIDF Research maintains their “buy’’ calls with a TP of RM2.12, RM2.08, RM2.16, RM2.14 a share respectively.
