In FY20, IGB REIT's realised net income of RM236.8mil was 109% and 110% of Kenanga's and consensus estimates respectively. It anticipated weaker 4QFY20 results due to the spike in Covid-19 cases.
However, Kenanga expects the outlook to remain under pressure as MCO 2.0 will continue to put a stain on retail MREITs as it threatens shippers' footfall, car traffic volume and could result in higher temporary closure of retail shops.
"That said, we believe FY21 will be better than FY20 as the lockdowns have been less strict with more shops allowed to operate compared to the MCO in CY20," it said.
The research house also does not expect the acquisition of SouthKey Mall in Johor in the near term and expects it would take at least one reversion cycle in light of the pandemic for the asset to stabilise before being acquired by IGB REIT, likely by FY22-23.
"Maintain FY21E CNP of RM288m and introduce FY22E CNP of RM293mil on low single-digit positive reversions and minimal expiries.
"Our FY21-22E GDPU of 8.14-8.25 sen (NDPU of 7.33-7.43 sen) suggest gross yield of 5.0-5.0% (net yield of 4.5-4.5%)," it said.
Kenanga maintained "market perform" on the counter and kept its target price of RM1.60.