Axis REIT ends FY20 on a positive note, optimistic on FY21
KUALA LUMPUR: Axis Real Estate Investment Trust (Axis REIT) ended the financial year 2020 (FY20) on a positive note, despite the ongoing Covid-19 pandemic that has shaken most other segments, and analysts are optimistic on the REIT’s prospects in FY21.
In a report, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) highlighted: “The group maintained stable occupancy of 91 per cent on the back of positive reversions despite the pandemic that has shaken most other segments.
“Going forward, the group has minimal expiries of 18 per cent of which it has locked in 32 per cent on positive reversions.”
It also noted that Axis REIT’s FY20 realised net income (RNI) of RM125.6 million came in within its and market expectations, at 97 and 99 per cent, respectively.
For FY21, Kenanga Research expected to see minimal leases expiring at 18 per cent of portfolio net lending assets (NLA), of which the group has already secured renewals for 32 per cent of these leases on positive low single-digit reversions, while FY22 will see 21 per cent of leases up for expiry.
“In the near term, the group is actively eyeing industrial assets worth a total of RM135 million, focusing on Grade A logistics located in Selangor, Penang and Johor and will continue to target acquisitions with net yield of more than six per cent.
“We expect positive low single-digit reversions going forward. Additionally, Axis REIT has accepted the LOs for a manufacturing facility worth RM120 million in Shah Alam, and a warehouse in Plentong Johor worth RM75 million which are pending due diligence exercise prior to SPA,” the research team opined.
Meanwhile, MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) said: “We expect earnings of Axis REIT to remain resilient in FY21 despite the imposition of MCO 2.0 in Malaysia as its tenants who are mostly in industrial industry remain operating.
“Earnings outlook is expected to be underpinned by its acquisition targets of RM135 million in the pipeline.”
Despite its optimism on the group’s outlook, MIDF Research retained its ‘neutral’ call on the stock due to limited price upside.