Affin Hwang raises target price for YTL REIT

Its job scope for the contract involves supplying concrete cement and metal for the upgrading of the Train Cargo Terminal at Padang Besar, Perlis, Dolphin said in a filing with Bursa Malaysia.

PETALING JAYA: Affin Hwang Capital Research has reaffirmed its “buy” rating on YTL Hospitality REIT Bhd at RM1.19 with a higher target price of RM1.38 (from RM1.32) after incorporating the earnings contribution from its recently-acquired Green Leaf Niseko Village hotel.

The research house said with an initial gross yield of 5.25%, against a borrowing cost of around 1%, it expects the deal to be yield accretive.

“Elsewhere, we have trimmed our profit forecasts for the Australian hotels, in view of the lower-than-expected revenue per available room (RevPar) in year-to-date FY19 estimate.

“Overall, we are lifting our FY19-21 estimate distributable earnings per unit by 0.5-2.9%. At a 6.8% FY19 yield, YTLREIT’s valuation looks attractive, in our view,” it said in a report yesterday.

To recap, YTL REIT had bought from YTL Corp Bhd the Green Leaf Niseko Village hotel located in Niseko-cho, Hokkaido, for six billion yen (RM222.5mil).

The 200-room, five-storey hotel will be leased to the vendor under a 30-year lease agreement, with an option to renew for a further term of 30 years. The initial annual rental payment is 315 million yen for the first five years, with a step-up provision of 5% every five years.

According to the research house, the RevPAR for YTL REIT’s Australian hotel slipped by 3.3% year-on-year in 1QFY19 due to lower average hotel occupancy of 83.6% from 87.7% in 1QFY18.

The dip in average hotel occupancy is attributable to the renovation at Brisbane Marriott Hotel, which is targeted for completion in early 2019 and lower take-up rates for its Sydney and Melbourne hotels.

“While we remain positive on its Australian hotels’ profitability, their FY19 estimated contributions may come in below our earlier forecasts due to lower-than-expected growth in average day rate,” it said.

Business , Stocks Analysis , YTL Reit


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