Quick take: Pavilion Reit shares slip on lower earnings

  • Stock on the Move
  • Friday, 12 Jun 2020

KUALA LUMPUR: Shares in Pavilion Real Estate Investment Trust (Pavilion REIT) fell in early trade Friday after it posted a lower earnings in the first quarter ended March 31.

The counter fell 2.41%, or four sen to RM1.62.

Pavilion REIT net profits halved to RM34.6mil for its first quarter ended March 31, compared to RM69.23mil reported in the previous corresponding quarter, mainly due to lower net property income.

Distributable income for the quarter under review was RM36.9mil or 1.21 sen per unit.

Its revenue stood at RM116.41mil, down 23% from RM150.92mil before.

The REIT attributed the lower earnings to the March 18-31 rent free period given to tenants that were not able to provide essential services and supplies during the movement control order (MCO) period.

Pavilion REIT elaborated that consumer sentiment is expected to remain cautious due to concerns of inflation, unemployment, and wage cuts evident by a drop in the consumer sentiment index to a 32-year low of 51.1 in the first quarter.

MIDF Research said Pavilion REIT’s first quarter core net income (CNI) of RM34.6mil was below the house and consensus’ full year estimates at 12.6% and 13.8% respectively.

It said the negative deviation was attributed to lower than expected revenue as well as higher than expected expenses.

“We expect the challenging operating outlook to persist in the next few months. This is mainly due to the cautious consumer sentiment and a shift in spending habit,” MIDF said, adding that the REIT manager is committed in helping eligible tenants to navigate through the challenging business environment with sustainable initiatives.

“The outlook for Pavilion KL Mall’s high-end retailers may be bleak due to consumers’ tightened budget and possibility of cutting back on luxury spending,” it added.

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