AllianceDBS maintains 'Hold' on Axis REIT, TP of RM1.80

  • Analyst Reports
  • Tuesday, 15 Oct 2019

KUALA LUMPUR: AllianceDBS research is positive over Axis REIT's plans to purchase a single-floor warehouse-cum-office building in Johor for RM64mil as it is growing its asset base with a focus on the logistics centre.

According to the research house, this asset was not part of the targeted assets disclosed earlier and therefore not included in its forecast.

"Based on an estimated yield of 7%, the net impact on earnings is minimal at c.1.3%. In terms of gearing, based on our forecast which already includes the targeted assets listed in the table on the next page, an additional RM65m of debt will increase Axis REIT’s gearing to 42% from 41% for FY20," it said.

It added that its forecast has factored in a 10% share placement in view of the higher gearing.

It maintained its forecast pending completion of the acquisition, and has a hold call on the counter with a target price of RM1.80.

To recap, Axis REIT said the building acquisition will be funded by existing bank financing facilities.

The property, together with ancillary buildings, is built on leasehold land with an unexpired 35 years and five months sub-lease term.

The property is located within the Pelabuhan Tanjung Pelepas (PTP) Free Trade Zone, located approximately 18 km from south-west of Johor Baru City Centre, 41 km from Senai International Airport and approximately 40 km from Port of Singapore Authority.

The lessee, Schenker Logistics (M) Sdn Bhd, is a one-stop-logistics provider offering total integrated logistics services to local and global customers, and is one of Axis REIT’s existing top ten tenants in terms of revenue contribution.
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