PETALING JAYA: KLCCP Stapled Group, which comprises KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust (REIT), is expected to see earnings improve for the financial year ending Dec 31, 2025 (FY25), despite some bumps ahead due to financing costs.
Analysts noted that KLCCP Stapled’s financial results for the fourth quarter ended Dec 31, 2024 (4Q24), released on Feb 5 were in line with expectations, but several pointed to financing costs and the lower FY24 earnings in adjusting the earnings forecast for this year and beyond.
HLIB Research projected earnings from the company’s retail and hospitality assets to improve in FY25, driven by stronger tourism growth and full-year contribution from Suria KLCC mall, following the acquisition of the remaining 40% stake in 2Q24.
“However, the significantly higher finance costs from funding the Suria KLCC acquisition will cap earnings growth,” the research house said.
HLIB Research maintained its “hold” call on the stock and kept its target price (TP) at RM7.71,
While noting that the company remains as stable as ever, RHB Research has lowered its FY25 to FY26 earnings forecasts for KLCCP Stapled by 1.5% and 1%, respectively, after adjusting for cost assumptions.
Expecting earnings to hit RM900mil in FY27, the research house raised its TP by 2% to RM8.52 per share after adjusting for longer-term rental reversion assumptions for the office and retail assets.
However, it maintained a “neutral” call on the stock.
RHB Research pointed out that KLCCP Stapled can expect rental reversion from PETRONAS Twin Towers to support earnings in FY25.
It noted that the company remains proactive in refreshing Suria KLCC’s offerings with the introduction of 28 new tenants, including five first-to-market tenants, while Mandarin Oriental, which saw a 14% increase in revenue in FY24, would continue to be refurbished in FY25.
“Despite increased competition from the opening of new malls in the city centre, Suria KLCC still recorded a 4% increase in footfall year-on-year, although moving annual turnover tenant sales fell 7% off a high base in FY23,” it added.
Kenanga Research, which maintained a “market perform” call on KLCCP Stapled, has increased its TP to RM8.52 a share from RM8.33, but lowered its FY25 earnings forecast by 2% due to slightly lower FY24 earnings.
It said the company would likely sustain a steady income stream and the stock’s solid fundamentals appear to be largely priced-in.
The research house also noted that longer-term fundamentals are intact as spending growth in retail sales in the non-luxury food and beverage and leisure fashion space remains supportive despite softer luxury spending following a high-base in FY23.
KLCCP Stapled ended 0.6% higher yesterday at RM8.40.
