Maybank IB Research said Axis-REIT is also eyeing new asset acquisitions, which are worth RM120mil in total.
PETALING JAYA: Axis Real Estate Investment Trust’s (Axis-REIT) near-term positives include its Bukit Raja Distribution Centre 2 in Klang that is on track for completion by end-August.
Another positive is the commencement of leasing to Shopee Express from Sept 1, said Maybank Investment Bank (IB) Research.
Axis-REIT is also eyeing new asset acquisitions, which are worth RM120mil in total, it added.
Maybank IB Research in its latest report said Axis-REIT’s gearing was at 0.36 times as at the end of financial year 2022 (FY22).
Commenting on the group’s fourth-quarter 2022 (4Q22) results, the research house said: “The core earnings were slightly below expectations but within consensus.”
The FY22 core earnings were at 93% of Maybank IB Research and 98% of consensus’ full-year forecasts, it said.
A final gross distribution per unit (DPU) of 2.33 sen was declared by Axis-REIT, bringing FY22 gross DPU to 9.75 sen.
According to Maybank IB Research, Axis-REIT earnings fell short mainly due to lower-than-expected property income and higher-than-projected non-property expenses.
Excluding a one-off revaluation gain of RM27.8mil, the research house said 4Q22 core net profit was at RM36.8mil, down 0.3% year-on-year (y-o-y) and fell 14% quarter-on-quarter. This brings FY22 core net profit to RM157.9mil, up 15% y-o-y.
Meanwhile, the group’s 4Q22 property income grew 13% y-o-y, largely supported by rental from four newly acquired properties, the commencement of new tenancies at Axis Industrial Facility @ Rawang and D8 Logistics Warehouse, and positive rental reversions.
“This, however, was partly offset by higher non-operating expenses from rising management cost, in line with the increase in its net asset value,” added Maybank IB Research.
It noted that finance costs were also higher by 25% from the additional financing facilities utilised to finance the new acquisitions and the hike in the overnight policy rate.
The 4Q22 portfolio occupancy rate was marginally softer at 95% compared with 96% in 4Q21, as Axis Facility 2 @ Bukit Raja is undergoing major enhancement since last August and will be ready for tenancy this March, said the research house.
It adjusted the group’s forecast earnings down 8% for FY23 and up 7% for FY24.
“This is mainly adjusting for lower non-operating expenses and factoring in new rental from Phase 2 development of Axis Mega Distribution Centre, which is expected to be ready to be tenanted from FY24 onwards, with similar rental structure as the Nestle Distribution Centre. We also introduce our FY25 estimates,” added the research house.
Maybank IB Research, which has a “buy” call on the stock, has increased Axis-REIT’s target price by 4% to RM2.16 a share.
