Kenanga Research, in its report on Axis-REIT, said the company’s bottom line increased by 29.3% despite higher financing cost ( 7.3%), in tandem with higher borrowings for new acquisitions.
PETALING JAYA: Axis Real Estate Investment Trust (Axis-REIT) is looking like a reliable defensive play, as its first half-year (1H) results match analyst expectations on strong occupancy rates and growth driven by acquisition of new assets.
The REIT’s 1H earnings of RM81.5mil came in within RHB Research’s estimates and market expectations at 52% of its full-year forecast and full-year consensus estimates, respectively.
Revenue for 1H increased 18.3% year-on-year to RM139mil due to positive rental reversions and rental contributions from four new acquisitions in the past year, with the most recent being a logistics warehouse in Johor for RM390mil that was Axis-REIT’s largest acquisition to date.
“After RM445mil worth of completed acquisitions so far this year and another RM120mil in acquisition target value, the REIT is on track for stable earnings growth, allowing it to remain a key defensive play, going forward,” RHB stated in a report yesterday.
Axis-REIT’s top-line growth was driven by commencement of new tenancies at the Axis Industrial Facility @ Rawang and D8 Logistics Warehouse, as well as on the back of positive rental reversions.
Kenanga Research, in its report on Axis-REIT, said the company’s bottom line increased by 29.3% despite higher financing cost (+7.3%), in tandem with higher borrowings for new acquisitions.
Quarter-on-quarter, Axis-REIT’s revenue was up by 8.9% on positive reversions and completion of one property in April 2022. Its gearing increased to 0.36 times (from 0.29 times) post the recent acquisition of the DW1 Logistics warehouse in Johor.
“The 1H dividend of 4.97 sen is at 53.6% of full-year forecasts. We continue to like Axis-REIT as its rental reversion outlook remains strong within the positive single-digit range on healthy occupancy of 96% and active acquisition trail while the downside risks are limited on low lease expiries,” Kenanga said.
Kenanga has a target price of RM1.95 on Axis-REIT, while RHB’s is RM2.19 and CGS-CIMB Research’s is RM2.34.
CGS-CIMB’s optimism is backed by Axis-REIT’s expectation for operating conditions to further improve in the second half of 2022, underpinned by the resilient demand for industrial and warehousing space.
“Its asset growth strategy remains intact with RM120mil worth of targeted new acquisitions in the pipeline, while focusing on Grade A logistics/manufacturing facilities with long leases.
“The RM250mil construction works for its Bukit Raja Distribution Centre 2 has commenced. Completion is slated for the third quarter of 2023, with a 15-year lease with Shopee,” the research house said.
