Axis REIT rating maintained at ‘Buy’

by NUR HAZIQAH A MALEK / graphic by MZUKRI MOHAMAD

AXIS Real Estate Investment Trust (Axis REIT) earnings for the first half of the year (1H21) were within expectations, said MIDF Amanah Investment Bank in a note yesterday.

“We maintain our target price for Axis REIT at RM2.04, based on the dividend discount model and maintain our ‘Buy’ call as we like their asset portfolio with mainly industrial assets.

“Earnings outlook is expected to remain stable as industrial assets are relatively shielded from Covid-19 pandemic while distribution yield is estimated at 4.3%,” MIDF analyst Jessica Low Jze Tieng stated in a note yesterday.

Axis REIT’s core net income for 1H21 was RM63.3 million and within the analyst’s expectations as well as the consensus, making up 48% and 45% of its and the consensus full year estimates respectively.

A second interim distribution per unit (DPU) of 2.4 sen was announced, bringing the total DPU to 4.63 sen.

The second quarter earnings were 1.9% lower at RM31.4 million quarter-on-quarter, bringing the cumulative earnings for 1H21 to RM63.3 million.

“The stable earnings growth in 1H21 was in line with higher topline which increased 6.9% year-on-year (YoY), which were mainly driven by rental contributions from newly acquired industrial assets.

“Earnings growth was partly offset by higher financing cost and higher property expenditure, while Islamic financing cost was higher by 11% YoY on additional financing facilities to fund new acquisitions,” the MIDF report stated.

The investment bank made no changes to its earnings forecast for financial year 2021 (FY21) or FY22.

“We remain positive on the earnings outlook for Axis REIT as its asset portfolio mainly consists of industrial assets whereby tenants are still operating amid Covid-19 pandemic.

“Besides, earnings growth is also expected to be contributed by earnings from potential asset acquisitions targets with a total estimated value of RM135 million,” she said.