AmanahRaya REIT’s 1HFY17 earnings within expectations
KUCHING: The core net income of AmanahRaya Real Estate Investment Trust (ARREIT) for the first half of financial year 2017 (1HFY17) of RM16.54 million came in within expectation, making up 46 per cent of MIDF Amanah Investment Bank Bhd’s (MIDF Research) full year estimates.
To note, ARREIT announced distribution per unit (DPU) of 1.34sen for the second quarter of financial year 2017 (2QFY17), bringing total DPU to 2.76sen for 1HFY17.
“The group’s 1HFY17 topline increased by 5.8 per cent year on year (y-o-y) to RM30.3 million, driven by earnings contribution from newly acquired assets namely Deluge Factory in Johor, Toshiba TEC in Bandar Glenmarie, and Contraves Building in Cyberjaya,” it said in a note.
“Nevertheless, 1HFY17 core net income declined by 10 per cent y-oy to RM16.54 million, mainly due to higher property operating expenses and higher manager’s fees.”
Total property expenses increased 65 per cent y-o-y, mainly owing to higher repair and maintenance expenses in 2QFY17, MIDF Research said.
“Nevertheless, we expect property expenses to normalise in 2HFY17. We make no changes to our earnings forecast for FY17 and FY18.
“We forecast FY18 earnings to climb 7.5 per cent y-o-y mainly driven by lease renewal of SEGi University in Kota Damansara which is its top rental contributor. Rental reversion for the property is expected to be resilient at about five per cent.
“We maintain unchanged target price of RM1.15 per share. We maintain our buy recommendation on ARREIT for its diversified assets base with exposure to education property. Dividend yield of ARREIT is also attractive at 5.8 per cent.”