"We expect additional rental assistance and weaker reversions (flattish from low single-digit) for the remaining leases up for expiry in FY20-21, as well as lower hotel occupancy of 20% (vs. 35%) in FY20 and 45% (vs. 55%) in FY21," it said.
The research house lowered FY20-21 core net profit by 10%-4% to RM605-669mil.
It kept its "outperform" recommendation but lowered target price to RM8.20 from RM8.55 previously after lowering FY21 forecast gross dividend per share (DPS) and net DPS to 35.2 sen and 33 sen.
According to Kenanga, the group has renewed 70% of about 30% of leases up for renewal in FY20.
The office segment, which is the backbone of the portfolio remains stable due to the long-term lease profile.
Meanwhile, Phase 3 of the Menara Dayabumi development is still in the tendering process as management is focusing on securing an anchor tenant before proceeding with the development.
For 9MFY20, KLCC Stapled Group's realised distributable income of RM471mil came within its and consensus estimates at 70% and 71% respectively.
The 3QFY20 net DPS of 6.91 sen brought 9MFY20 payout to 21.52 sen, which was below MIDF's forecast net DPS of 33.2 sen.
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