‘Hold’ stance kept on Sunway REIT
KUALA LUMPUR: Sunway Real Estate Investment Trust’s (REIT) hotel and retail segments are likely to recover first with easing restrictions, supported by local leisure and business travellers, higher footfall and potential “revenge spending”.
Hong Leong Investment Bank Bhd (HLIB Research) analyst Farah Diyana Kamaludin expects Sunway REIT’s hotel segment to remain soft in the near term following a bleak hospitality industry outlook along with the temporary closure of Sunway Resort Hotel for refurbishment.
“Sunway REIT will be focusing on cost containment and lean operations by prioritising critical expenditures and enhance distinctive marketing and collaboration,” she said in a research note yesterday.
On the retail segment, the overall occupancy remains healthy at 95 per cent, especially for Sunway Pyramid Mall which, being strategically located within an integrated township, showed resiliency.
“We expect the retail segment to improve gradually from the relaxation of restrictions and we foresee pent-up local demand aided by ‘revenge spending’, just like what we saw during the Recovery Movement Control Order.”
Farah said the continuation of 10 per cent electricity tariff rebate would aid in the recovery via reduction in operating costs.
Meanwhile, Sunway REIT’s industrial segment saw growth in ecommerce, with online shopping becoming the new norm, creating a strong tailwind for the operations of warehousing and logistics companies.
HLIB Research noted that Sunway REIT continues to seek opportunities in this segment in view of Malaysia’s resiliency in the industrial sector especially in manufacturing, logistics and distribution activities.
HLIB Research has maintained a “hold” call with adjusted target price from RM1.48 to RM1.45 per share.