Sunway REIT reported a 10% decline in net profit to RM86.98 million in the first quarter of 2024 compared to RM96.46 million a year ago.
PETALING JAYA: MIDF Research has maintained its ‘buy’ call on Sunway Real Estate Investment Trust (Sunway REIT) on a positive outlook as it expects contribution from the retail division to remain stable in the long term on the back of positive rental reversion.
Additionally, the outlook for the hotel division is also improving with the expectation of higher tourist arrivals.
“Moving forward, earnings from Sunway Pyramid should normalise from the financial year 2025 (FY2025) onwards as the reconfiguration exercise of Sunway Pyramid should be completed in FY2024.
“Besides, the rental contribution from six hypermarkets that were acquired in April 2024 should lift earnings in the second half of FY2024,” it said in a note.
Yesterday, Sunway REIT reported a 10% decline in net profit to RM86.98 million in the first quarter of 2024 (Q1 2024) compared to RM96.46 million a year ago, while revenue decreased by 2% to RM178.59 million from RM182.8 million previously.
“The core net earnings in the first quarter of FY2024 (Q1 FY2024) came within expectations, making up 24.2% and 24.5% of ours and consensus full-year estimates, respectively,” it said, adding it has maintained the target price (TP) of RM1.70 for the stock.
Meanwhile, Hong Leong Investment Bank (HLIB) also gave a positive outlook for Sunway REIT as it expects the retail segment to stay strong on the back of higher rental reversions along with higher disposable incomes supporting tenant sales.
“The hotel segment will continue to benefit from improving tourist arrivals,” it said.
It has maintained a ‘buy’ call for the stock with a TP of RM1.94.
Meanwhile, Kenanga Research has maintained its ‘outperform’ call on Sunway REIT despite a decline in net profit following asset disposal coupled with higher marketing expenses.
“While keeping our forecasts relatively unchanged, we trim our dividend payout forecasts slightly to reflect higher capital expenditure.
“However, we reckon that the group’s brand equity also benefits greatly from its affiliation to the Sunway conglomerate,” it said.
It has cut the company’s TP by 4% from RM1.72 to RM1.65 per share.
At 12.30am, Sunway REIT’s share price was down by 1sen or 0.64% at RM1.55, giving the group a market capitalisation of RM 5.31 billion.
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