"We increase FY21E earnings on better-than-expected revenue contribution from the retail segment on less rental rebates in light of its resilience seen in 3QFY21, while the hospitality segment’s occupancy is expected to remain at c.20% for FY21.
"Growth for FY22 is driven by less YoY rental holidays for retail tenants and better occupancy for the hospitality segment at c.40%," it said in a note.
Kenanga noted that the group is actively securing most of the tenants for the retail space and is expecting flattish to mildly positive reversions going forward.
Meanwhile, the group's main driver, the office segment, remains extremely stable on long-term leaded of over 15 years.
It said its office assets have locked in long-term leases with the recent extension of the Triple Net Lease agreements for Petronas Twin Towers and Menara 3 Petronas for a further 15 years to 2042, reinforcing its revenue stability.
Menara ExxonMobil has secured lease renewal for the next three years of its 18-year lease tenure.
For the nine months to Sept 30, KLCCP Staples group had a realised distributable income of RM44mil, which was slightly above Kenanga's expectation at 81% of full-year estimate. It came within consensus expectations at 73% of its full-year outlook.
"Maintain 'outperform' and TP of RM7.35 on FY22E GDPS/NDPS of 34.6 sen/32.4 sen on an unchanged +1.1ppt yield spread to our 10-year MGS target of 3.60%," said Kenanga.