PETALING JAYA: Sunway Real Estate Investment Trust’s (REIT) recent financial results were largely in line with analysts’ expectations. They maintained their calls on the company.
In its report, Hong Leong Research said Sunway REIT’s third quarter 2013 normalised net profit rose 16.1% year-on-year to RM55.2mil, making up 75.4% and 79.4%, respectively, of its and consensus estimates.
In a filing with Bursa, the REIT manager said the distribution per unit for financial year ending June 30, 2013 was expected to be higher than financial year 2012, supported by growth in the retail sub-sector and interest savings from capital management initiatives.
Hong Leong, which is maintaining its “hold” call on the firm, said Sunway REIT was currently trading at 5.1% yield, which represented the lower boundary distribution yield in its view while the target price was maintained at RM1.49.
In its note to clients, HwangDBS Vickers Research, while maintaining its “buy” call on the company, said it had earlier assumed that Monash and Sunway University campuses would be injected in financial year 2014, but ongoing construction works on the assets and potential for the universities to pay out rentals (in line with rental growth) may delay the injection timeline.
As such, it is pushing back its injection assumption to financial year 2015.
In light of the softening office market beginning to impact Sunway REIT’s office assets, the research house has also assumed lower near-term rental reversions and occupancies (notably on Sunway Tower and Sunway Putra Tower).
The management has also forecast higher capital expenditure in fiscal 2014 of around RM300mil, which would be funded by debt, implying greater finance costs.
Sunway REIT closed at RM1.58 yesterday, down two sen.
Source : Star, May 3, 2013
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