PETALING JAYA: With its fully occupied portfolio, AME Real Estate Investment Trust
(AME-REIT) is a “solid defensive play”, with earnings upside from both organic and inorganic growth opportunities, supported by a pipeline of new developments.
RHB Research said this to clients in a report, adding that the earnings for the first half of the company’s financial year 2025 (1H25) were in line with expectations, with stable earnings growth from new acquisitions and positive rental revisions.
The research house maintained a “buy” call on AME-REIT, with a revised target price of RM1.57 from RM1.53.
AME-REIT’s recent results were in line with expectations, at 50% of full-year forecasts, the research house added.
It noted that, compared with the 5% of gross rental income up for renewal in its financial year 2025 (FY25), 30% and 20% were due in FY26 and FY27, respectively.
“As occupancy rates are full, we think downside risks are minimal, and this gives the REIT the opportunity to record higher rental rates.
The REIT is also in the process of acquiring RM120mil worth of assets, which should support earnings growth in FY26.”
As of end-September, the REIT had a gearing ratio of 14.9%, which RHB Research estimates will increase to 27% following the completion of proposed acquisitions.
“This is still at the low end for Malaysian REITs under our coverage, which have an average gearing ratio of 32%, and should provide a financing headroom of RM380mil before it hits the 50% gearing limit and needs to raise funds through equity,” the research house said.
It also said it was raising its FY26 and FY27 earnings forecasts by 2% and 3%, respectively, after adjusting rental-revision assumptions.
“Our target price incorporates a 2% environmental, social, and governance premium, based on our in-house methodology,” the research house said.
