IGB REIT's 1HFY21 realised net income of RM88mil was broadly within Kenanga Research's expectations at 42% of its full-year estimate as it expects an economic reopening in the fourth quarter to boost earnings.
However, it was below consensus expectations at 34% of its full-year estimate.
For the third quarter, there will be continued efforts by the REIT to retain tenants although Kenanga noted minimal tenancy expiries for both its malls in FY21-22 at under 30%, providing some comfort.
"We do not expect the acquisition of Southkey Mall in Johor to happen in the near term and reckon that it would take at least one reversion cycle or longer in light of the Covid-19 pandemic for the asset to stabilise before being acquired by IGBREIT, likely by FY22-23," said Kenanga.
The research house maintained its FY21-22 core net profit forecast of RM208-293mil on flattish to low single-digit positive reversions and minimal expiries.
Its FY21-22E gross dividend per unit of 6.07-8.27 sen (net dividend per unit of 5.46-7.44 sen) suggests gross yield of 3.7-5% and net yield of 3.3-4.5%.
"Maintain 'market perform' and TP of RM1.70 on FY22E GDPS/NDPS of 8.27 sen/7.45 sen and on an unchanged +1.2ppt spread to our 10-year MGS yield target of 3.60%," it said.