AmanahRaya REIT’s 1QFY17 earnings in line
KUCHING: Core net income of AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) of RM8.3 million for the first quarter of financial year 2017 (1QFY17) came in within expectations, making up 23 per cent of MIDF Amanah Investment Bank Bhd’s (MIDF Research) full year estimates.
On a sequential basis, MIDF Research said AmanahRaya REIT’s 1QFY17 core net income was stable as it inched up by a marginal 0.16 per cent quarter on quarter.
“Meanwhile, 1QFY17 core net income declined 12 per cent year on year to RM8.3 million, mainly due to lower rental contribution from few assets namely AIC factory in Shah Alam, Holiday Villa in Alor Setar, and South City Plaza in Seri Kembangan.
“While the decline in earnings in not unexpected, we forecast stronger earnings going forward as we expect earnings contribution from newly acquired assets – such as the Deluge Factory in Johor, Toshiba TEC in Bandar Glenmarie, and Contraves Building in Cyberjaya – to make up the shortfalls.”
To note, the REIT declared distribution per unit of 1.43 sen for the period.
MIDF Research maintained its earnings forecast for FY17 and FY18, with an earnings growth forecast of two per cent y-o-y underpinned by stable rental income from its assets.
“Meanwhile, we forecast FY18 to grow at 7.5 per cent y- o- y mainly driven by lease renewal of SEGi University in Kota Damansara which is its top rental contributor.
“We maintain our buy recommendation on AmanahRaya REIT for its education property exposure where rental reversion is typically resilient at five to seven per cent.
“Besides, prospect for asset management of the REIT is positive following the entry of Kenedix Inc as a substantial shareholder in December 2016. Meanwhile, dividend yield is attractive at 5.7 per cent.”